Benefits of STP in Mutual fund
How does STP work The investor needs to select a fund from which the transfer should take place and a fund to which the transfer is taking place. Transfers can be made daily, weekly, monthly, or quarterly depending upon the STP chosen and the options available with the AMC. If an investor chooses to transfer from a liquid fund to an equity fund, the lump sum is invested in a liquid or a floating short-term plan and is transferred at regular intervals to a specified equity fund. For example, if one has 50,000 to invest in equities; he can put the entire amount in a liquid plan and go for a monthly SIP of 5,000 in an equity plan through an STP. STPs can carry Exit Loads as per the respective schemes of the AMC. A Systematic Transfer Plan is of three types; Fixed STP, Capital Appreciation STP, and Flexi STP. Fixed STP - In Fixed STP, the investor takes out a fixed sum of money from one investment to another. Capital Appreciation STP - In Capital Appreciation ST