How to use systematic transfer plan in your mutual funds investments

Investors often struggle with their SIP installment when the stocks markets are at their peak. At the same time, when the markets fall, they wish they had done SIP of some more amount. ICICI Prudential AMC’s Booster STP is giving an option to invest according to this market volatility. The company has added a new feature in the Systematic Transfer Plan (STP) which will boost the STP amount. This means when the markets are up, an investor will be able to transfer less amount from debt funds to equity mutual funds. And when the markets are weak then this STP will increase the amount. By increasing the amount it will buy more units for the investors.

How is Booster STP different?

In a regular STP, you put a lump sum amount in a debt mutual fund and gradually transfer it to equity mutual funds. According to Chintan Haria, head of product and strategy, ICICI Pru, the amount in the current STP remains fixed. Flexi and swing STPs increase or decrease the amount but their goal remains to keep the portfolio balanced. But Booster STP is linked to market movements. The investor fixes a base amount, with respect to the markets, the investor will get 1/5 times the amount.

“Think of it like this, if the base amount is 10,000, then the minimum transfer will be Rs 1000 when the market is on the rise and there is pressure, then up to Rs 50,000 can be transferred,” Haria added.

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