Primarily, MIP of mutual fund is a debt-oriented scheme that generally invests up to 75-80% of its corpus in debt instruments and the remaining in equity instruments. MIPs aim to provide investors with regular pay-outs (though dividends) - although it is not mandatory for the mutual fund scheme as dividends are paid at the discretion of the fund house and subject to availability.

MIP aims to provide reasonable returns on a monthly basis through investment in debt as well as a small portion in equities. They invest predominantly in interest yielding debt instruments (commercial paper, certificate of deposits, government securities and treasury bills). The debt investments ensure stability and consistency while the equity instruments in the portfolio boost the returns. MIPs are market-linked (to the extent of their equity portfolio).

Mutual fund is an investment tool in which funds from different investors are collected and pooled together to further invest it. Risk in mtual funds is comparatively very low then other modes of investment .