This gives you the opportunity to earn from better performing schemes and pull your money out from an underperforming scheme. Investors with varying risk appetites prefer STPs for a number of reasonsĪn STP allows you to transfer funds from one mutual fund scheme to another. For example, if your investment of Rs 20,000 in Scheme A has appreciated to Rs 35,000, the Rs 15,000 capital gain will be transferred to another scheme that has the potential to generate higher returns. In Capital STP, the gains made from one scheme are systematically transferred to any other scheme which has higher growth potential. Based on the prevailing market conditions, the investor can gauge the returns possible from one or more schemes and can plan fund transfer accordingly. In the case of a Flexible STP, the investor is free to decide when and how much fund he wants to transfer from one scheme to another. The amount gets transferred automatically from the source scheme to the destination scheme. In the case of a Fixed STP, the total amount to be transferred from one mutual fund scheme to another remains fixed as decided by the investor. There are generally three types of STP - Fixed STP, Flexible STP, and Capital Systematic Transfer Plans Moreover, there are no entry loads in STPs but depending on the mutual fund scheme, you can be charged exit loads of up to 2 percent. However, some asset management companies mandate a minimum investment of Rs 12,000 from the investors to be eligible for STP. As per SEBI, there is no minimum investment required to start STP mutual funds.However, most funds houses do not offer the weekly transfer option. You can avail a weekly, monthly, or yearly option. Typically, 6 transfers allowed are allowed. You can transfer funds only between mutual funds schemes managed by the same asset management company.All these options can be used to minimize risk and gain throughout every market condition. Many asset management companies also allow transferring funds to debt mutual fund schemes. Moreover, you can also transfer funds from a liquid fund scheme to a mutual fund scheme or vice versa. For example, if your IT heavy mutual fund scheme is not performing well, you can transfer the funds to a good performing mutual fund scheme. This allows you to use market fluctuations in your favour. In case you have a lumpsum investment in only one mutual fund scheme, you can transfer a part of it or the whole to other schemes as well.The funds can be transferred only in between the mutual fund schemes operated by a single fund management company. The scheme from which the funds are transferred is known as the source scheme or transferor scheme, while the scheme in which the funds are deposited is known as the target scheme or destination scheme. STP mutual fund means transferring funds from one mutual fund scheme to another periodically. The money is automatically adjusted between the fund schemes and the investor can benefit from all the available resources simultaneously.Īn investor can opt for STP in mutual funds. The key advantage of STP is the seamless transfer and utilization of funds. STP is a beneficial strategy to stagger your investments over a specific period of time in order to mitigate risks and generate balanced returns. This protects investors during extreme market fluctuations, particularly when the fund scheme chosen by the investor is performing poorly. With STP, investors can transfer funds periodically to minimize loss from one scheme and gain advantages from the other. The full form of STP is Systematic Transfer Plan. ![]() STP is a process that allows investors to transfer their funds from one scheme to another without any hassle.
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