Religare Mutual Fund which has been coming up with Innovative Funds has come out with another curious Fund, Religare Monthly Income Plan (MIP) Plus.
The fund is 'plus' in the sense that it will have an exposure to Gold through Gold ETF in addition to Fixed Income instruments and Equities.
GOLD impact :
Gold has negative correlation with Equities and is considered a good hedge against Inflation. In normal MIPs, the Fund Manager did not have the flexibility to tilt his allocation towards Gold, but the Religare MIP Plus has this option, which can be used by the Fund Manager to improve diversification and enhance performance.
Gold's inverse correlation will stabilize the risk/return profile of the Fund.
The Fund Manager indicated that he would ideally look at
70% Debt
15-20% Equity
10-15% Gold Etf
DEBT : The Fund would like to be more inclined towards 'short term' papers around 1 year maturity. The Fund would prefer to invest in Corporate Bonds rather than Govt Papers.
EQUITIES: The Equity portion would be tilted towards Large Cap, sources at the Religare MF said.
GOLD : Gold investment would be in the form of investment into the units of Religare Gold ETF. The Fund has an option to look at other ETFs as well.
COMMENT & RECOMMENDATION:
Pure Gold ETF is not an easy investment option due to the volatile currency situation which can test your skill.
Pure Equity will always carry the 'volatility risk' and test your patience as well.
Here's where a Fund Manager's skill will come into play. He will tilt his investment towards the Best Asset Class depending on the situation and with Gold too as an option, Religare MIP Plus is a "good investment choice" for the equity-averse investor, as this Fund has the potential to add value in varying market conditions.
The Fund is now open for subscription and will close on May 11, 2010.
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Hi Srikanth,
ReplyDeleteThanks for posting about the Religare MIP Funds.
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Religare Customer Care Team
Your analysis about funds are very informative, Thanks for sharing your knowledge. Your advise is worth dollars.
ReplyDeleteHi Srikanth,
ReplyDeleteI happened to be at your blog and it is an excellent effort by you to educate many people who have the intention but are not aware of the various options available.
As with ULIP's, my cents on the subject. I am 35yrs of age and I have a ULIP from Metlife(Met Smart Premier) which covers me for 100 yrs with a sum assured of 20 Lacs. My annual premium is one Lac. Minumum premium payment period is 3 yrs as with most ULIP's. Since the objective is to keep investment and insurance separate, I plan to make premium payments for the first 3 - 4 yrs and leave it to grow till the 5th year. At a very conservative rate I expect a return of 5% p.a at the end of 5 yrs. If I pull out my money leaving back one annualized premium (1 lac), I am still covered till 100 yrs of age without paying any more premium. I expect the amount that I have left behind to suffice the policy expenses till the age of 100. Net to net, what I spend for an insurance cover of 20 lacs till 100 yrs would be far far less than what it would be for a term policy. I guess Metlife has discontinued this policy and no more new policies are opened under this scheme. I am not sure if there are other ULIPS that give 20 times cover. If there are I would be interested in opening another one.
Raj