A Monthly Income Plan (MIP) is a type of mutual fund scheme that majorly invests in debt securities to generate accrual income for the investor. Only a certain portion of assets is allocated to equity securities for capital appreciation. Since, they invest in a mix of debt and equity securities, they are classified as Hybrid Funds.
MIP is suitable for those investors who wish to have steady extra income, and do not want to put the invested capital at risk. After the investor has invested his/her money in a MIP scheme for a specific number of years, s/he can avail the monthly payout of the accrued income till date. Owing to this, MIPs are quite popular amongst the retirees, who view it is an additional source of income, apart from their pension or annuity plans.
Top 10 Monthly Income Plans to Invest
Here is a list of top 10 Monthly Income Plans you can consider investing to generate quality returns, and earn regular income:
| Fund Name | 3 – Year Returns | 5 – Year Returns |
| ICICI Prudential Regular Savings Plan | 6.09% | 7.54% |
| Baroda Conservative Hybrid | 7.04% | 7.20% |
| BNP Paribas Conservative Hybrid | 5.90% | 7.19% |
| Kotak Debt Hybrid | 3.67% | 6.39% |
| Essel Regular Savings | 3.56% | 5.91% |
| SBI Debt Hybrid | 1.96% | 5.54% |
| IDFC Regular Savings | 3.09% | 5.49% |
| Franklin India Debt Hybrid | 3.00% | 5.01% |
| ABSL Regular Savings Plan | 0.48% | 4.88% |
| UTI Regular Savings | 0.66% | 3.88% |
{Data as on March 25, 2020; Source: Value Research}
{Funds have been ranked on the basis of 5 – year returns}
1. ICICI Prudential Regular Savings Plan
- It is an open-ended Conservative Hybrid scheme that invests around 75% of its assets in debt instruments for generating accrual income, and the remaining in equity securities for capital appreciation.
- The scheme aims to leverage the volatility in equity and debt markets through dynamic asset allocation, active duration management of debt portfolio, which majorly consists of highly rated government and corporate bonds.
| Returns | 3 Year Returns | 5 Year Returns |
| ICICI Pru Regular Savings Fund | 6.09% | 7.54% |
2. Baroda Conservative Hybrid Fund
- It is an open-ended hybrid scheme that primarily invests in debt instruments, with the objective of generating regular income for its investors along with long-term capital appreciation.
- The credit rating of the underlying debt instruments in this fund is high, which ultimately reduces the credit risk of the portfolio. In regard to equity allocation, the fund invests in growth stocks which have a high growth potential in the long run.
| Returns | 3 Year Returns | 5 Year Returns |
| Baroda Conservative Hybrid Fund | 7.04% | 7.20% |
3. BNP Paribas Conservative Hybrid Fund
- It is an open-ended scheme that invests around 75% of its assets in debt instruments, that yield regular income, and the rest in equities to substantially appreciate the investor’s capital.
- The fund has delivered impressive returns over the 5-year and 7 -year time period, and has significantly outperformed its benchmark and category returns.
- This scheme is suitable for risk averse investors who are seeking the stability offered by debt securities, and the growth potential of equity securities.
| Returns | 3 Year Returns | 5 Year Returns |
| BNP Paribas Conservative Hybrid Fund | 5.90% | 7.19% |
4. Kotak Debt Hybrid Fund
- It is an open-ended scheme that invests in a mix of debt, money market instruments and equity & equity related instruments.
- Debt allocation is done keeping in mind the interest rate risk and credit risk. The fund invests in equity in two parts, one part is allocated with the long term perspective, whereas the other part is actively churned. These strategies of assets allocation effectively reduces the overall portfolio risk, and aids in delivering better returns.
| Returns | 3 Year Returns | 5 Year Returns |
| Kotak Debt Hybrid Fund | 3.67% | 6.39% |
5. Essel Regular Savings Fund
- It is an open-ended scheme that predominantly invests in debt securities to generate regular fixed income, and invests a portion of the portfolio in equity securities for giving a boost to the overall portfolio returns.
- Selection of debt and equity securities is done after thorough research of the market and state of the economy, which ensures that credit risk, interest rate risk and market risks are effectively mitigated.
| Returns | 3 Year Returns | 5 Year Returns |
| Essel Regular Savings Fund | 3.56% | 5.91% |
6. SBI Debt Hybrid Fund
- It is a debt oriented hybrid scheme that primarily invests in debt and money market instruments for generating fixed income for the investors. It also invests in equity securities to give a jump to the overall portfolio returns. However, the equity exposure is capped at 25%.
- The debt allocation is based on numerous parameters such as macroeconomic factors, market dynamics and credit rating of the debt instrument. Over the years, the fund has delivered impressive returns owing to their sound investment strategy.
| Returns | 3 Year Returns | 5 Year Returns |
| SBI Debt Hybrid Fund | 1.96% | 5.54% |
7. IDFC Regular Savings Fund
- An open-ended conservative hybrid scheme that primarily invests in debt instruments with limited exposure to equity markets.
- It has around 65% allocation of assets to debt securities, around 25% in equities and 10% in cash and cash equivalents. The equity allocation acts as a booster for overall portfolio returns, and aids in reasonable capital appreciation.
| Returns | 3 Year Returns | 5 Year Returns |
| IDFC Regular Savings Fund | 3.09% | 5.49% |
8. Franklin India Debt Hybrid
- The fund primarily invests in debt instruments with a maximum exposure of 25% to equities, and aims to generate regular income through active portfolio management.
- The fund manager believes that the scheme is a good alternative to multi asset investment, and equity allocation boosts the overall portfolio returns and gives this fund an edge over the conventional debt funds.
| Returns | 3 Year Returns | 5 Year Returns |
| Franklin India Debt Hybrid | 3.00% | 5.01% |
9. Aditya Birla Sun Life Regular Savings Plan
- It is an open-ended debt oriented hybrid scheme that invests in a mix of debt and equity securities, with inclination towards debt securities. The idea is to generate regular income through debt allocation, and appreciate investor’s capital through equity allocation.
- The fund holds a good quantum of government bonds that gives stability to the portfolio returns as the credit quality is very high. This essentially means that the chances of the government defaulting on its payment obligations is minuscule.
| Returns | 3 Year Returns | 5 Year Returns |
| Aditya Birla Sun Life Regular Savings Plan | 0.48% | 4.88% |
10. UTI Regular Savings Fund
- With around 80% allocation of assets to debt and money market instruments, the fund seeks to generate regular income for its investors.
- The recent turbulence in the money market has impacted the portfolio returns negatively, although in the long run, the fund has delivered impressive returns. For instance, the fund returns in the 7 -year time period stand at 7.32% (at par with the benchmark and category returns)
| Returns | 3 Year Returns | 5 Year Returns |
| UTI Regular Savings Fund | 0.66% | 3.88% |
How to invest?
There are two ways through which a person can invest in Monthly Income Plans (MIPs):
- Online
You can invest in MIPs online seamlessly through online platforms (such as Paisabazaar.com) or directly through the websites of the Asset Management Companies (AMCs) that offer the fund.
- Offline
This conventional mode of investment requires an investor to fill a form and submit it at the nearby branch of the fund house, or invest through a broker.
To know more about the investment procedure for mutual funds, visit: How to invest in Mutual Funds?