How safe are MIPs?

What you might gain or lose if.....
(NAV Rs 10)		.....debt principal return remains 5 per cent and equity is
		up by				down by
		25%	20%	15%	10%	10%	15%	20%	25%
Fund A
Debt (%)	100	5	5	5	5	5	5	5	5
Equity (%)	0	0	0	0	0	0	0	0	0
Total return (%)		5	5	5	5	5	5	5	5
Fund B
Debt (%)	90	4.5	4.5	4.5	4.5	4.5	4.5	4.5	4.5
Equity (%)	10	2.5	2	1.5	1	-1	-1.5	-2	-2.5
Total return (%)		7	6.5	6	5.5	3.5	3	2.5	2
Fund C
Debt (%)	80	4	4	4	4	4	4	4	4
Equity (%)	20	5	4	3	2	-2	-3	-4	-5
Total return (%)		9	8	7	6	2	1	0	-1

 Election results are a worry
While nobody is betting against the bull run to continue in the long term, there remains one problem that is worrying fund managers in the immediate term - the general election and its impact on the markets.  While markets seems to have factored in the victory of the BJP-led NDA, recent exit polls show that it may be too early to make that call. What if the electorate throw up a fragmented mandate?  According to Nandan Chakraborty, head of research at domestic securities firm, Enam Securities, general elections hold the key to the future growth of markets.  "If the elections throw up a hung parliament, then we could see a phase of uncertainty and we could see the Sensex hanging around 5,500 levels (down 400 points or 7 per cent from the current levels)," says Chakraborty.  Amitabh Mohanty, vice president (fixed income) at Alliance Capital Asset Management (India) concurs with that point of view. He agrees that there is higher risk of volatility in the markets post-elections, but it is likely to be temporary.  "The negative impact, if any, will be sorted out in the medium-term. The fundamentals are still sound for the growth story to continue in the long-term," says Mohanty.  Chakraborty is of the view that despite the short-term concerns, the India story is still inviting, especially for FIIs. "The positive aspect is that FII inflows continue to grow, which shows FIIs