Fund houses seem to have taken a fancy to monthly income plans (MIPs) over the last few weeks. But is this a passing phase or are MIPs here to stay?

MIPs are best suited for investors who want to save for a rainy day. So ideally a MIP investor can be one who is either retired or is nearing retirement.

MIPs are expected to get increasingly popular given Indias large middle class population. As Krishnamurthy Vijayan (chief executive officer of JM MF) opined, People are definitely going to require monthly income plans. There are a whole lot of people who want to save for a rainy day and on retirement they would like a steady income stream. These people will have to be catered to. MIPs are here to stay and there will be such products coming out regularly.

That explains why MIPs have become the flavour of the day. First it was Reliance Mutual Fund, followed by Kothari Pioneer MF. Prudential ICICI MF has just launched an MIP, initial public offering (IPO), which will close on 14th October. JM, Birla and Cholamandalam are some of the other fund houses that have outlined plans to roll out MIPs in the near future.

In addition to retired or semi-retired individuals, MIPs also make good investment avenues for investors who are looking for a steady and reliable income stream. To that extent, MIPs will fund a large market in the country and the indications are they are here to stay.

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