MIPs beat bond fund returns, lose to gilts

 The top ten MIPs registered an average return of 13.86 per during the period against 13.09 per cent for bonds funds. It, however, paled in comparison to gilt funds which saw an average return of 20.41 per cent during the 12 months.

 Interestingly, these schemes have seen a phenomenal growth in assets under management (AUM).Typically, an MIP invests 85-90 per cent of its corpus in debt and the rest in equity.

 Falling interest rates have enabled medium-term debt funds to register higher gains. This also means that fresh investments will be made at relatively lower interest rates. Thus, in the medium term, debt funds face a higher re-investment risk, but a small equity allocation could allow them to generate superior returns over the long term.

 The top four schemes, in terms of percentage growth in AUM, have reported a growth of more than 140 per cent each. The AUM of Tata Mutual Fund