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Trading

What is Systematic Transfer Plan (STP)?

Published by Gbaf News

Posted on May 4, 2013

1 min read

· Last updated: June 11, 2018

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Systematic Transfer Plan is a methodology where an investor has to pool the money in debt-equity market and later on he can choose option to transfer a portion of money to equity market on a pre-selected date, thereby continuing to reap benefits of the lump sum amount invested in debt market at same time.

 

 

Key Takeaways

  • STP allows gradual transfer of lump‑sum investments from debt to equity funds over time.
  • It helps mitigate market timing risk and enables rupee cost averaging.
  • STPs operate only within the same fund house (AMC).
  • Types include Fixed, Capital Appreciation, and Flexible STPs.

References

Frequently Asked Questions

What is a Systematic Transfer Plan (STP)?
An STP automatically transfers a fixed or variable amount from one mutual fund scheme to another at regular intervals, typically from a debt to an equity fund within the same AMC.
Why use an STP instead of lump‑sum investing?
STPs reduce market timing risk by spreading the investment over time and benefit from rupee cost averaging while earning returns in the interim debt fund.
What types of STP are available?
Common types include Fixed STP (fixed amount each period), Capital Appreciation STP (transfers only gains), and Flexible STP (amount varies based on conditions).
Can STP transfers occur across different fund houses?
No, STPs must be within the same Asset Management Company (AMC); transfers across AMCs are treated as separate redemption and investment transactions.

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