Systematic Transfer Plan


STP refers to the Systematic Transfer Plan whereby an investor is able to invest lump sum amount in a scheme and regularly transfer a fixed or variable amount into another scheme. In case of a volatile market, STP helps the investors to periodically transfer funds from one scheme (source scheme) to another (target scheme) and help them save the effort and time by compressing multiple instructions required for redemption from one scheme to invest in the other into a single instruction. Transfers are usually made from debt funds to equity funds if the market is doing well and vice versa if the market is not performing well.

The STP can be classified based on the amount transferred from the source scheme to the target scheme. If a fixed sum is transferred from the source to the target scheme, then it's called Fixed STP, and if the sum transferred is the profit part of the investment of source scheme, then its called Capital Appreciation STP.

Advantages of STP

  • Works as SIP: You can invest in a Debt funds and from there you can start a STP to an Equity Fund , so it works like a systematic Investment Plan (SIP)
  • Works as Systemetic Withdrawal Phase: So STP can also work like SWP, because with some funds you can do transfer from Equity funds to Debt Funds, so when markets look risky to you, you can start a STP from Equity to Debt funds, which will act like SWP
  • Liquidity: Generally one does STP from Debt to Equity funds, so your money is invested in Debt fund. This means you can sell it anytime if you want. Hence it works like a Emergency Fund also. Incase you need money urgently, it can act like a liquid asset (at least for the time being in the start when you have more money in Debt fund)
  • Growth in Money: Generally one does STP from Debt to Equity funds, so your money is invested in Debt fund. This means you can sell it anytime if you want. Hence it works like a Emergency Fund also. Incase you need money urgently, it can act like a liquid asset (at least for the time being in the start when you have more money in Debt fund)

When is STP ideal

STP will make sense from DEBT to Equity when market are volatile and you dont want to take risk with your money in a short span of time, If you invest through STP in markets and markets fall or have lots of volatile moves, then this situation will be better than the one time investment option. This is still better than putting money in Bank and doing a SIP, because at least your money is earning some returns on debt part in STP

When STP does not Work

Incase markets are already at the end of a Bear market and market can start its up move anytime, in that case STP will not deliver the best returns like SIP, one time investment is a good choice in that case. But then you never know that when will markets start going up. Given that a retail investor does not have all the tools and time to research the markets, its not advisable to invest lump sum in any case. Its better to get 4-5% less returns than to see a huge downside of your money in short time, Smart investors think about returns, Smartest ones take care of risk first

Ideal for STP

Investors who want to invest lump sum money in schemes with stable returns and ensure small exposure to equity schemes in order to avail of the potential for higher growth through equities. Invest a lump sum amount in a debt-oriented scheme (Debt schemes can be either 100% debt or High Debt and Low equity). Specify a desired amount to be transferred to any equity schemes of the same AMC . This works like a SIP (Systematic Investment Plan), Lowering Risk and increasing returns. This is best suited when markets have peaked or the investor is unsure of the further uptrend in the market Search.


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