Monthly Income Plans from Mutual Funds are more aggressive in investing in debt and can allocate a part of their funds to equities, thereby giving superior returns to investors. Their ability to allocate the money to equities ensures that they generate returns that could at times be better than other fixed income yielding securities.
1) Birla Sun Life Monthly Income Plan II - Wealth 25 Plan
The Fund has been ranked number one by Crisil for the period ending Sept 2014. The Fund as the name suggests is managed by Birla Sun Life Mutual Fund and has assets under management to the tune of Rs 294 crores.
The Fund has given a return of 27 per cent in the last one year, with a three return of almost 15 per cent. This means the fund has generated reasonable returns in the last few years.
A bulk of the assets of the company have been deployed in government securities. In fact, Central Government securities comprise a huge 25 per cent of the portfolio.
The fund also has exposure to equities like Eicher Motors, Repco Home Finance, V Mart Retail, Motherson Sumi etc.
One can invest in the scheme through a minimum SIP of Rs 1000. However, it's important to remember that the exit load is rather high and the exit load for less than one year is a huge two per cent.
2) UTI MIS Advantage Plan
UTI MIS Advantage Plan has also been rated number one by Crisil. The Fund is aggressively positioned to invest in Debt.
Since launch in 2003 the fund has generated a return in excess of 10 per cent. In the last one year the returns have been more than 21 per cent, while the three year returns have been close to 13 per cent.
The fund has largest exposure in the debt segment to government securities and several AAA rated corporate debt.
3) Canara Robeco Monthly Income Plan
Canara Robeco Monthly Income Plan is another good performing debt oriented fund. The scheme has been ranked number two by Crisil. Since launch in 2001 the fund has generated a return of close to 12.31 per cent. Like most of the other debt funds it has a solid exposure to government securities. Apart from this the equity portfolio comprises stocks like ICICI Bank, Larsen and Toubro among others
All of these funds have been highly rated by Crisil. Their exposure to debt makes them safe bets. A little exposure to equity means they can generate superior returns than other fixed yielding investments like bank deposits.