What is Systematic Transfer Plan (STP)?

Systematic Transfer Plan or STP is strategic option offered to investor to move from one scheme to another scheme of a same asset management company (AMC). STP option is advantageous when one scheme is not performing well and another scheme is performing well of same asset management company. Investor get the chance to move his funds to good performing scheme of same AMC. You can switch from one scheme to another scheme and transfer fixed or variable amount to other schemes. As investment in mutual funds comes with inherent market volatility and high risk it might happen that one scheme of equity / debt funds is not performing well. Thus, it is beneficial to switch or transfer from one scheme to another which is why STP is preferred. STP can be done only when investor already has units of a particular mutual fund scheme and mutual fund scheme is open ended.

What are main advantages and highlights of Systematic Transfer Plan?

  • What are benefits of Systematic Transfer Plan (STP)?

    • Investor can switch from one scheme to another scheme easily.
    • Investor can take advantage of current market performance and volatility where he can transfer money from one scheme to another which is performing better in all aspects.
    • If debt fund is not performing well then investor can transfer to equity or hybrid fund and vice versa.
    • One can even transfer the amount equal to profit in other scheme doing so you get more mutual funds units of other schemes as well which can balance your investment further.
  • Examples of STP option:

    • Consider an example where investor has 500 units of Fund A with Scheme 1. Due to market risks, performance of scheme 1 is not well in current situation. In this situation investor has chosen to start STP in Fund A in scheme 2 which is at lowest price and performing well. So after STP is started on the same date as of SIP, units of Fund A with scheme 1 will be redeemed and units of Fund A with scheme 2 will be bought. Thus investor money is transferred to another scheme hassle free.