Kolkata: Mutual fund investments have turned into the most preferred route for the huge middle class in India with SIP (Systematic Investment Plans). In April 2025, as much as Rs 26,632 crore was pumped in to mutual funds through the SIP route alone — making it well over Rs 1,000 crore a day. However, the markets are rather volatile now and investing a lumpsum into mutual funds at these times at one go might not be the best of ideas.
It is in this context of investing a significant amount in times of turbulence or volatility that STP becomes relevant. Systemic Transfer Plans constitute a strategy that involves a disciplined, planned transfer of a large amount of money between two mutual fund schemes. Analysts say that the basic objective of STP is to ensure you don’t invest at an elevated level and suffer the impact of a volatile market. The rate of transfer of money from one fund to another is predetermined by the investor. The important point to remember is that the two funds — the source and the destination — should be from the same asset management company.
Designed to average out the cost
Kolkata-based investment advisor and director Wishlist Capital told News9live.com: “The markets are moving through a degree of volatility. In this situation it is advisable to follow a strategy which can tackle volatility effectively. In fact, this can be a characteristic of this year. The trick is to stagger the lump sum investments over a certain period of time. It averages out the investment over a pre-fixed time window and thus attempts to tackle volatility.”
Select a liquid fund first
If you are looking for capital appreciation, it is not advisable to invest a big amount in one go. A popular approach is to first transfer the entire into a liquid fund for stability. Liquid funds are a category of mutual funds which invest in debt instruments. The significant point is liquid funds, while ensuring stability, offers a far higher return than the savings account in a bank. Liquid funds deliver 6-7% returns. Then one identifies an equity fund in the same mutual fund house. The third step is to fix an amount that will be transferred from the liquid fund to the equity fund. Depending on the initial amount of money and the rate of transfer each month, the entire amount will be transferred in a certain time from the debt fund to the equity fund.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)
STP is different from SIP, the favourite investment tool of millions in this country. What is STP or Systematic Investment Plan and how can it help an investor in times of turbulence in the market. Read on to know. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
