Equity markets are on a roll since March 9, 2009 and the hectic buying activity has been continuing till June 8, which has caused the Sensex to turn in huge gains to the extent of 79.72 per cent.
This has brought cheer to all those who have taken part in this rally and among the beneficiaries can be counted mutual fund investors in Monthly Income Plans (MIPs), even though the exposure of these funds to equities is generally limited to a maximum of 30 per cent.
The category of funds that fall in the ambit of MIPs has turned in gains of 10.30 per cent over this period. The top MIP fund HDFC MIP Long-term has turned in gains of 22.16 per cent and close to it is ICICI Prudential Income Multiplier Reg with a 21.02 per cent rise.
The achievement has not be restricted to just this aspect, between March 5, 2009 and June 8, 2009, around 27 funds have registered their best-ever quarterly gains.
However, amidst the euphoria there are still some investors who have not booked gains as there are two funds, Baroda Pioneer MIP and LIC MF Floater MIP Plan B, that have delivered negative returns of 0.23 per cent and 0.65 per cent respectively. Both funds had zero exposure in equities during this period.
The strong performance of MIP funds has surely resulted in more funds declaring dividend, after most of them failed to be regular in paying dividend in recent times.
In the month of May, around 25 funds under monthly dividend plan have paid dividend, which is the highest number since February 2008.
Although it is not obligatory for the MIP funds to declare dividend regularly, they generally attempt to do so. But after the markets started on their southward journey in January 2008 they found it very difficult to stick to their objective in spirit.
Since January 2008, out of a total 35 funds that have monthly dividend plans, only five funds, Birla Sun Life MIP II Savings 5, DBS Chola MIP, Principal MIP, ICICI Pru MIP and UTI Monthly Income Scheme have managed to declare regular dividends, that is, in all the months between January 2008 to May 2009.
Among the stuttering-on-dividend-payment brigade, there were 13 funds that paid dividend for five months or less between January 2008 and February 2009.
Two funds, DSPBR Savings Manager Aggressive and DSPBR Savings Manager Moderate didn’t pay any dividend during this period. But both the funds have tried to compensate their investors by paying the highest dividend among the MIP funds of 4.64 per cent and 3.15 per cent respectively in the month of May. These funds have turned in return of 10.41 per cent and 6.89 per cent respectively.
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