Please suggest a good small-cap fund to add to my portfolio. I want to invest Rs 1,000 per month in it via SIPs. Also tell me how much monthly returns I will get if I invest Rs 5 lakh in Reliance Monthly Income fund.
All small-cap funds are performing poorly right now, but they can do well as and when the markets turn around. If you want to invest in very small companies, go for DSP BlackRock Microcap. The other options to pick from are DSP BlackRock Small and Midcap and Sundaram SMILE. If you decide to invest in them, be prepared for high volatility in their performance.
Coming to your second question, the name of mutual fund MIPs is highly misleading. Investors shouldn’t expect a monthly income from them. Most MIPs invest 10-15 per cent of their assets in equity. They shouldn’t be your primary source of income. if you want a guaranteed income on which you would be dependant, go for the Senior Citizens Savings Scheme (if you're over 60 years old), which gives you quarterly interest and 9 per cent annual returns. You can also opt for the Post Office MIP that gives guaranteed returns. From mutual fund MIPs, you can expect returns of around 8-9 per cent even in bad times. But remember, there is always a chance of your investment value going up and down in MIPs.