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A Veteran MIP

After a poor 2004, Tata MIP has staged a strong comeback. The oldest of all MIPs is doing what it does best-winning with a fairly non-aggressive portfolio

As on June 21, 2005, the fund has gained 3.13 per cent as against the category average return of 2.64 per cent.

Tata MIP has dominated the category on most occasions. Last year, though, it hit a rough patch and slipped into the bottom half of the category. Huge underperformance in the first, third and last quarters of 2004 resulted into a disappointing return for the fund.

Tata MIP's long-term report card is impressive-a 12.48 per cent yearly return since launch in April 1997. Last year, it maintained an average 8.59 per cent allocation to equity-the highest ever. Allocation to relatively riskier mid- and small-cap stocks was also higher-an average 44 per cent. However, things have changed now. Equities account for 7.15 per cent of the portfolio, with large-caps in abundance.

The fund has also managed its volatility very well-at present, Tata MIP is one of the least volatile funds in the category.

On the debt side, the fund maintains a gilt and AAA-rated bonds dominating the portfolio. Sometimes though, it gets a bit greedy and pays for it. For example, in the first quarter of last year, it kept a higher average maturity of 2.7-3.7 years and underperformed the category. Since then, it has declined constantly to touch an all-time low of 0.78 per cent.

At present, AAA and gilts accounts for nearly 54 per cent of the portfolio. Interestingly, exposure to below AA-rated papers has increased over the past one year-from a low of 1.2 per cent in February last year to 9.88 per cent as on February 28, 2005-though, it has fallen back to 8.93 per cent as on May 31, 2005.

With expectation of further rise in bond yields, holding on to cash is not a bad idea. The fund has sorted out its volatility problem and is doing well after a blip in returns last year. Tata MIP is one of the better long-term performers in the category.