MUMBAI, March 1: Here's a mutual fund scheme which has been a consistent performer. Birla Income Plus, the first debt-oriented scheme from the private sector, is ideal for liquidity. Also, a good tax-saving instrument, it is an open-ended scheme in which one can invest anytime and exit whenever he chooses to.Though there's nothing like assured returns in this, its big fund size of over Rs 550 crore lends it a shock-absorbing quality, says a Birla MF official. That is, it has a good potential of bearing risk due to the huge size. Even if a certain scrip falls, the fund doesn't lose much because its exposure to any one company is limited. So, the two features that help Birla Income Plus stand out are its consistent performance and its shock-absorbing ability. Being the biggest debt fund, Birla Income Plus seems to gain from `big is beautiful', adds an official.
Popular among people looking for regular income, Birla Income Plus offers two options - Dividend option (Plan A) and growth option (PlanB).
Under dividend option (Plan A), dividend is declared twice a year, in March and September. Adds an official, the first dividend in this plan was declared in September 1996 at 16.5 per cent annualised.
After that, the dividend in March 1997 stood at 16 per cent annualised or 8 per cent half-yearly; in September 1997 it was 14 per cent annualised or 7 per cent half-yearly.
Meanwhile, the dividends are exempt from tax under Section 80L up to Rs 15,000 and no TDS is deducted till the dividend is up to Rs 10,000. Under the growth option (Plan B), the appreciation is reflected in its NAV price. And there's no TDS whatsoever on redemption of any amount, against a limit of Rs 10,000 in the dividend option.
But the duration for which the money is kept is of crucial importance for tax purposes in the case of the growth plan. For instance, if the investment is kept for more than 12 months and one day, it attracts long-term capital gains and is eligible for indexation benefits.
The indexation benefit willhelp you reduce your tax liability and therefore the taxable income. On the other hand, if the investment is withdrawn before one year and one day, it attracts short-term capital gains and can be set off against short or long-term capital gains.
All Birla Income Plus investors have the option to go for regular withdrawal plan - an ideal way to get regular returns. In this, post-dated cheques are distributed to BIP investors on monthly, bi-monthly or quarterly basis. No matter what plan you opted for initially, you can change over to regular withdrawal any time.
Investing in Birla Income Plus is easy with quite a realistic minimum investment amount - just Rs 3,000. Thereafter, you can invest in multiples of Rs 1,000. However, there's no maximum limit of investment.
Another feature which makes it a popular scheme is its open-ended nature. You can enter the scheme any time you like and exit at your convenience too. The scheme is opened for subscription throughout the year. And with no lock-in or maturityperiod, one can go for complete or partial withdrawal any time.
Redemption, if one is to believe the company officials, is not time consuming, once you have applied for it. According to officials, money is returned within five working days of the receipt of redemption request.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
