That stands for Unit Trust of India Monthly Income Plan Rest in Peace.

Newspaper reports indicate that UTI has drawn the curtain on its once-popular assured return Monthly Income Plan (MIP). With this another assured return scheme bites the dust.

Earlier we had sounded out visitors on the pitfalls of assured return schemes In fact, with so many assured return schemes being shut/revamped (Canbank MF, ICICI Pru Single Premium, LIC Bima Nivesh and now UTI MIP) the only thing assured about these schemes is that they won't be assured for too long.

As financial markets get more complicated and the Indian economy gets more enmeshed with the global economy, the only constant is change and the only certainty is uncertainty. In this scenario, the old order will have to make way for the new one. So assured returns, which served their purpose well in the late 80s and early 90s are unlikely to find a place in the sun in these complicated times. Even institutions have realised that (albeit a little belatedly) and have scrapped/revamped these plans.

Investors must be watchful when looking at assured return schemes. The failure on the part of the institutions (UTI, LIC, ICICI-Pru, Canbank MF) to sustain the assured rate of return should serve as an indicator to them about the unfeasibility of these schemes. What is even more noteworthy is that these institutions are government-backed and so in a way even the government has washed its hands off these schemes. So look before you invest in these schemes, because all that glitters is not gold.

 

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