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FT India MIP

Though audacious, the fund has delivered best three and five-year returns in its category

This is an aggressive monthly income plan. Over 18 per cent allocation to equities and the fund's fascination for lower rated papers mean that it takes aggressive calls on markets and credit quality. This makes the fund volatile and risky for conservative investors. But those willing to stay invested for the long-term should have no problem here.

Experienced management team and good long-term track record are the positives. It boasts of the best three- and five-year returns in the category. Having said that, the fund has been hit hard during the recent market crash.

Between May 10 and June 6, the fund lost 4.71 per cent.

Historically, active management of equity as well as debt portfolios has resulted in handsome gains for investors. FT India MIP started as a Rs 43-crore fund in November 2000 and established itself as the best in its category the very next year. Since then it has delivered consistent return.

On the debt side, the fund has benefited immensely by playing its maturity card aggressively. The fund normally keeps average maturity more than an average peer. Since the second quarter of 2005, the average maturity had been over 2 years. But there is a noticeable shift in this regard in the month of June, when the average maturity was reduced below one year.

The fund also loves to invest in lower rated papers to squeeze some extra returns — for instance, below AAA papers have enjoyed double-digit representation consistently.

On the equity side, the fund makes optimum use of its mandate to invest up to 20 per cent of the assets in equities. In the last one year, the fund has cashed in on the equity markets rally by allocating an average 19 per cent of its corpus to equities. Within equities, the fund tries to rely upon large-cap quality stocks. FT India MIP can be a good choice for aggressive investors willing to wait for sometime.