When was the last time you asked for or invested in a Monthly Income Plan (MIP)? Equity oriented funds are always in the limelight and tend to get majority of the investments however equity markets are unpredictable by nature, and as a result your asset allocation is exposed to potentially higher risk. Investments are, after all, all about optimising returns to meet your needs and aspirations, based on your risk appetite.

Not all investments appreciate, or depreciate in the same proportion, at the same time, and asset allocation helps reduce risk and improves return potential. Tax efficient returns and diversification of assets are some of the reasons why debt funds are a must for every portfolio.Over a longer time frame it is asset allocation which can help you to not only safeguard your portfolios from the downside, but also create wealth.

For a moderate risk-taking investor, MIPs offer the opportunity to give higher returns compared to debt fund investments, and for a high risk-taking investor, MIPs offer the opportunity to incorporate a degree of stability in an equity portfolio. Sadly, a product that can add value to your portfolio is now a forgotten lot.

So what exactly are MIPs or Monthly Income Plans?

• MonthlyIncome Plans (MIPs) are mutual funds designed with the objective to give a regular return (in the form of income) to investors with monthly, quarterly, half-yearly and annual options (or such other periodicity introduced by fund houses from time to time). Investors who choose the growth option get a return
  in the form of capital appreciation.

• Primarily meant for those investors looking for an alternate source of regular income, people who have opted for VRS, and also parents looking for a convenient option to meet their child’s education and monthly allowance.

• MIPs can manage to provide the monthly income as they can invest in equities which give a boost to the returns and is also ideal for investors with a modest risk appetite who do not want to miss out on the Bull Run.

• The best part about MIPs is that they can be made suitable to a much broader investor mass in line with their respective risk appetite, for example: conservative MIPs (invest 5-10% in equities), moderate MIPs (invest upto
  15-20% in equities) and the aggressive MIPs (invest upto 25-30% in equities).

• MIPs score over comparable investment avenues in tax efficiency as mutual fund dividends (in case declared by the scheme) are tax-free in the hands of the investor.

Principal Monthly Income Plan (MIP) invests upto 15 percent in equities and Principal Monthly Income Plan – MIP Plus, an aggressive MIP offering, investing upto 25 percent in equities, with the remainder of both the portfolios in high quality debt instruments.

Performance of Principal Monthly Income Plan (MIP) and Principal Monthly Income Plan – MIP Plus (as on Feb 29, 2008)

Both the schemes - Principal MIP and Principal MIP Plus have also won the 5 Star Award at the ICRA Mutual Fund Awards 2008 for their 1 year performance*.

MIPs can add significant value and you must consider making allocations (if regular income is necessary) in line with your risk appetite.

For more details about investing in mutual funds, tax saving mutual funds best mutual funds in India to invest in and to learn how to invest in mutual funds log on to http://www.principalindia.com/ or mail campaign@principalindia.com

Statutory Details:
The Mutual Fund is sponsored by Principal Financial Services Inc. USA through
its wholly owned subsidiary, Principal Financial Group (Mauritius) Limited with
Punjab National Bank (PNB) and Vijaya Bank (VB) as its co-settlors. Sponsor:
Principal Financial Services Inc., USA. Trustee: Principal Trustee
Company Private Limited. Investment Manager: Principal Pnb Asset
Management Company Private Limited. Risk Factors: Mutual funds and
securities are subject to market risks and there can be no assurance and no
guarantee that the objectives of the schemes can be achieved. As with any
investment in securities, the NAV of the units issued under the Scheme(s) can go
up or down, depending upon the factors and forces affecting the capital markets.
Past performance of the Sponsor/AMC/ Principal Mutual Fund/Punjab National Bank/
Vijaya Bank does not indicate or guarantee the future performance of the
Scheme(s) of Principal Mutual Fund. Principal Monthly Income Plan (Investment
Objective: The objective is to generate regular income through investments in
fixed income securities so as to make periodical income distribution to the
Unitholders and also to generate long-term capital appreciation by investing a
portion of the Scheme’s assets in equity and equity related instruments.) and
Principal Monthly Income Plan - MIP Plus (Investment Objective: The objective is
to generate regular income through investments in fixed income securities so as
to make periodical income distribution to the Unitholders and also to generate
long-term capital appreciation by investing a portion of the Scheme’s assets in
equity and equity related instruments and to cater to investors seeking a
slightly more aggressive exposure to equity markets.) are only the names of the
Schemes and do not in any manner indicate either the quality of the Schemes or
their future prospects or returns. The Sponsor is not responsible or liable for
any loss resulting from the operations of the Mutual Fund beyond the
contribution of an amount of Rs. 25 Lakhs towards setting up Principal Mutual
Fund. Investors in the scheme are not being offered a guaranteed or assured rate
of return or monthly or regular/periodical income distribution, and the actual
returns and/or periodical income distribution of an investor will be based on
the distributable surplus. For scheme specific risk factors, terms of issue etc.
investors are urged to read the Offer Document carefully and consult with their
legal/tax/investment advisor before they invest the Scheme. Copy of offer
document can be obtained at the investor service centers of AMC and from our
website www.principalindia.com .

*ICRA
Mutual Fund Awards 2008:
Principal Monthly Income Plan (ICRA - Marginal Equity) and Principal Monthly
Income Plan - MIP Plus - Growth(ICRA - Marginal Equity) have been given the Five
Star Award for their 1 year performance by ICRA Mutual Funds Awards 2008 till
December 31, 2007. These ranks indicate top performance within the specified
category for their 1 year performances. The ranks are an outcome of an objective
and comparative analysis against various parameters, including: risk adjusted
return, fund size, sector concentration, portfolio turnover, liquidity, company
concentration and average maturity. The ranking methodology did not take into
account entry and exit loads imposed by the Fund. The ranks are neither a
certificate of statutory compliance nor any guarantee on the future performance
of the funds mentioned. Ranking Source & Publisher: ICRA Online.