After some tumultuous months for monthly income plans, November has come as breather with both equity and debt markets notching up fresh gains. The average return from MIP in November has further improved to 1.02% after a positive return of 0.74% in october and a negative return in September.
Thanks to a buoyant market and much to the relief of MIP investors, most monthly income plans have declared dividends with Alliance MIP hiking the payout from 4 paise in October to 7 paise in November. Even the recently launched Prudential-ICICI MIP, which closed its IPO in October, declared its maiden monthly dividend of 0.74 per cent (7.4 paise) on December 6. The fund has an ex-dvidend NAV of Rs 10.11.
While Templeton has maintained its monthly dividend at 0.6% or 6 paise, investors in Sun F&C MIP have a reason to cheer as the fund's NAV has crossed the Rs 10 level and is currently perched at Rs 10.07. Launched in March this year, the fund has paid only one dividend of 9 paise so far. With the markets in bear grip, Sun F&C MIP languished below par for almost four months. "We are considering a payout in the monthly option this month,'' says Parijat Agarwal at Sun F&C AMC. Reliance MIP, which paid its first dividend on November 21, is also expected to make its second payout this month.
On the other hand, Kothari Pioneer Monthly Income Plan has declared its portfolio. With a NAV of Rs 10.19, the Rs 43.5 crore fund is fully invested in debt instruments and the fund manager plans to invest in equities as and when the markets stabilise. "The performance of the fund has been steady and it should be in a position to declare the maiden dividend in January 2001,'' says Suresh Soni at Kothari Pioneer. It may be recalled that Templeton had adopted a similar strategy of investing fully in debt instruments when equity markets were trapped in a bear vortex earlier this year. This helped the fund sustain its monthly dividends, except in July, when even debt markets had retracted sharply on interest rate hike.
Surely, although open-end monthly income plans do not assure returns, the absence of monthly payout is bound to annoy investors. However, investors must also remember that unlike assured return MIPs, open-end MIPs are not insulated from market movements and returns are a clear function of the performance of debt and equity markets. So, next time when you don't receive your monthly cheque, blame it on the choppy markets.
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