Monthly income plans (MIP) are wrongly understood to pay monthly income by several investors. These funds suit investors seeking income from investments at low-risk that can beat inflation. This category is not the best option to consider to substitute fixed monthly expenses in retirement.
Debt-oriented conservative funds or MIPs are those with less than 25 per cent equity exposure in the past one year. While MIPs aim to provide regular dividends, it is not mandatory. Dividends are paid at the discretion of the fund house and subject to availability of distributable surplus. While beating inflation is desired of these funds, it has failed to do so over the past five years.