If you think volatility does not gel with monthly income plans, skip this fund. But those who can bear with the ups and downs would be rewarded.
There are no half measures here. By aggressively managing both the debt and equity portfolios, Alliance MIP provides something extra. A 13.68 per cent yearly return since launch in July 1999 speaks volumes about utility of this MIP as a long-term investment.
But you need to be patient here. This fund will test your endurance. It's standard deviation has always been on the higher side. Even now, it's (0.52) more than the category average (0.45). As on June 7, 2005, the fund has gained 2.07 per cent as against the category average return of 2.48 per cent.
On most occasions, it bets heavily on equities. This strategy has worked for the fund-in 2003, it maintained an average 13.25 per cent exposure to equities as against the category average of 9 per cent and emerged out as the hottest MIP with a return of 20.14 per cent. Last year too, it maintained over 13 per cent allocation to equities and found a place in the top half of the category. Rally in scrips like Bharti Tele-Ventures, Divi's Lab and Tata Motors has been rewarding for the fund.
The debt portfolio is aggressive as well. The fund had been maintaining a higher average maturity. It dropped below 2 years only in February.
The fund does not hesitate to buy below AA-rated papers-at 19.62 per cent, the exposure to them is one of the highest in the category and way above category average exposure of 13.87 per cent at March end. On the other hand, the fund has maintained a below average exposure to safer gilt and AAA papers.
This aggressive postures have rewarded the fund handsomely but they have also punished it dearly at times. For example, too much equities backfired in 2001 when the fund found itself at the category's bottom.
Also, a higher gilt exposure at higher maturities caught the fund off guard when the bank rate was unexpectedly hiked in July 2000.
This article was originally published on June 08, 2005.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
