UTI Mutual Fund is giving an upfront commission of 1.1% under its monthly income scheme (MIS), UTI Advantage Plan, for distributors to switch fund money from liquid funds to MIS schemes. Apart from a good brokerage, UTI MF is also offering attractive prizes to distributors including a trip to Tashkent.
“MIS plans have exit load of 1%, so asset management companies (AMCs) are able to give the same to distributors. Liquid funds are not very attractive for AMCs. Customers are asked to invest in liquid schemes first, then they are asked to switch to MIS plans for a long-term investment perspective,” said a distributor.
Industry sources say that the prizes include sports bicycles, and trips to various pilgrimage spots. Distributors who are able to mobilise more than Rs75 lakh stand to win a Volkswagen Polo through a lucky draw offer.
Besides, distributors mobilising 20 applications and more for a minimum of Rs3 lakh get a ‘Cricket India lookalike jersey’ with their names printed on it. The offer lasts until 31March 2010 and the prizes will be announced after 17 May 2010.
“MIP schemes have more avenues of charging money than liquid funds,” said an independent financial advisor (IFA). Liquid funds charge an annual management fee of up to 0.70% that is lower than MIS schemes.
Monthly income schemes have a time horizon of six months to one year wherein a major portion of the fund is invested in debt instruments while liquid funds have a short term lock-in period of 7-10 days having a maturity period between three to six months. In case of liquid funds, the minimum investment amount ranges from Rs25,000 to Rs1 lakh. UTI MIS Advantage Plan had a corpus of Rs265.57 crore as on 28 February 2010. It has posted a return of 10.76% since its inception in December 2003. — Moneylife Digital Team