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Minimal Equity Exposure

Tejas Joshi wants to know about the options for a retired individual to invest in mutual funds with minimum exposure given to equity. Here's what we suggest she should do…

If a retired individual (age 60) wants to invest 50 per cent of the retirement corpus in mutual funds, what are the options if equity exposure is to be kept at a minimum level? Is an MIP advisable? Is the monthly income tax free? Also suggest some schemes.
-Tejas Joshi

If you wish to have minimal or no equity exposure then you should opt for pure debt funds. These funds invest in debt instruments and have lower risk associated when compared to equities. MIPs or Monthly Income Plans have varied equities component which depends on the mandate of each scheme. Some MIPs can even have equity component in the range of 20-25 per cent. So you would need to figure out the equity exposure you require before investing in a particular MIP. HDFC Long Term MIP, UTI MIS- Advantage are some aggressive MIPs whereas Birla Sun Life MIP and ICICI Prudential MIP are some less aggressive picks as they have less exposure to equities. The monthly income from these MIPs (in form of dividends) is absolutely tax free in the hands of the investors. Though you should keep in mind that these dividends are not guaranteed.


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