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IDFC Monthly Income Plan (MIP)

What is this about?

It is a fund of funds (FoF) scheme that will invest at least 65% of its money in debt funds, including liquid funds, and the rest in equity funds. It aims—but not promises to (on account of regulatory constraints)—to distribute a steady income.

What works?

Since IDFC mutual fund already has a bunch of equity and debt funds across broad categories, it felt the need to launch a hybrid fund (investing in equity and debt markets) in an FoF format. Initially, it will stick to its own schemes.

What doesn’t?

It offers very little over existing MIPs. The FoF structure does not have inherent benefits and, in this case, it suits the fund house more than it does the investor. The fund’s management will merely have to pick from a handful of its own schemes.

MONEY MATTERS TAKE

An FoF scheme has an annual expense of 0.75%, in addition to what the underlying schemes charge. FoFs are typically meant for those who are unable to pick and choose schemes on their own. Apart from being a good pedigreed fund house, the NFO does not offer anything new.Stick to monthly income plans from Mint 50 that can be viewed at livemint.com/mint50.

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