Advanced Financial Management · Mutual Funds

SIP, SWP, STP and Scheme Comparisons for CA Final AFM

Updated 5 October 2026 · Fact-checked

SIP invests a fixed amount at regular intervals, SWP redeems a fixed amount at regular intervals, and STP moves a fixed amount from one scheme to another. To solve, build a table of date, NAV, amount and units, total the units, find average cost and closing value, then compute return and compare schemes after loads.

Understand SIP, SWP, STP and Scheme Comparisons

A Systematic Investment Plan (SIP) means you invest a fixed rupee amount in a scheme at fixed intervals, usually monthly. You do not fix the number of units. The amount is divided by the NAV on that date, so you get more units when NAV is low and fewer when NAV is high.

This is rupee cost averaging. Your average cost per unit is total money invested ÷ total units bought. This works out lower than the simple average of the NAVs (or equal if every NAV is the same). It does not guarantee a profit. It only means you did not buy a fixed number of units at high prices.

A Systematic Withdrawal Plan (SWP) is the reverse. You hold units and redeem a fixed rupee amount at regular intervals. The units sold each time = withdrawal ÷ NAV. When NAV is low, more units are sold, so your balance units fall faster.

A Systematic Transfer Plan (STP) moves a fixed amount from one scheme (the source, often a liquid or debt scheme) to another (the target, often equity) of the same fund house. It has two legs: units redeemed from the source at its NAV, and units bought in the target at its NAV. Check the question for exit load on the source leg.

Scheme comparison and conversion questions ask which option leaves the investor better off. Put every option on the same base: same amount, same period, same loads. Then compare final value, units held or return.

Key rules to remember

Units bought in SIP: Units = Instalment amount ÷ NAV (or ÷ purchase price if entry load applies); Use the NAV of the date of each instalment. Fractional units are allowed unless the question says otherwise.
Average cost per unit: Average cost = Total amount invested ÷ Total units acquired; This is the harmonic mean of NAVs when instalments are equal. Do not use the simple average of NAVs.
Closing value of holding: Value = Total units × Closing NAV (less exit load if redeemed); Use the repurchase price if the question asks for the amount realised on redemption.
Absolute return: Return % = (Closing value + Withdrawals or dividends received − Amount invested) ÷ Amount invested × 100; Include all cash taken out earlier, such as SWP withdrawals.
Annualised return (single investment): Annual return = (Closing value ÷ Opening value)^(1/n) − 1, n in years; For SIP with many instalments, a simple division is not accurate. Use it only if the question asks for an approximate or absolute figure.
Units redeemed in SWP: Units sold = Withdrawal amount ÷ NAV (or ÷ repurchase price if exit load applies); Balance units = Opening units − Units sold.
Entry and exit price: Sale price = NAV × (1 + entry load %); Repurchase price = NAV × (1 − exit load %); Apply the load the question states. Do not assume a load if none is given.

How to solve SIP, SWP, STP and Scheme Comparisons questions

Use the same table method for SIP, SWP and STP. Only the direction of the cash changes.

1Identify the plan: SIP (buy units), SWP (sell units) or STP (sell in source, buy in target).
2Note the amount, frequency, period, each NAV, loads and the closing NAV given.
3Build a table with columns: date, NAV (or price after load), amount, units bought or sold.
4For each row, compute units = amount ÷ NAV. Keep at least three decimals if units are fractional.
5Total the units. For SIP find average cost = invested ÷ units. For SWP find balance units = opening − sold.
6Value the closing holding at the closing NAV. Add any cash withdrawn if the plan is SWP or STP source.
7Compute return = (final value − invested) ÷ invested. Annualise only if the period and question ask for it.
8For comparison or conversion, repeat for each option on the same base. State which is better and why, with the numbers.

Quickest way: Unit table in four columns

When to use it: Use this when time is short and the question gives a list of NAVs for equal instalments or withdrawals.

Write NAVs in a row and the fixed amount once.
Divide the amount by each NAV to get units. Add them up.
Average cost = total invested ÷ total units. One division only.
Closing value = total units × closing NAV. Return follows in one line.
For SWP, subtract units sold from opening units first, then value the balance and add cash withdrawn.

Common mistakes in SIP, SWP, STP and Scheme Comparisons

Taking the simple average of NAVs as the average cost in a SIP.
The word average suggests adding NAVs and dividing by the count.
Fix: Always divide total money invested by total units. The simple average of NAVs is only a comparison figure.
Dividing the instalment by NAV when an entry or exit load is given.
Students remember NAV and forget the load line in the question.
Fix: Use purchase price = NAV × (1 + entry load) for buying and repurchase price = NAV × (1 − exit load) for selling.
In SWP, selling a fixed number of units instead of a fixed amount.
It is confused with a fixed-units plan.
Fix: Units sold = withdrawal ÷ NAV of that date. The units change with NAV.
Calculating SWP return only on the closing value of the remaining units.
Money already withdrawn is forgotten.
Fix: Add total withdrawals to the closing value of balance units, then compare with the original investment.
Treating STP as a single transaction.
Only the target scheme is noticed.
Fix: Show both legs. Redeem units in the source at its NAV (after any exit load) and buy units in the target at its NAV.
Comparing schemes over different amounts or periods.
Each option is solved separately and the base is not checked.
Fix: Put all options on the same investment, period and loads, then compare final value or return.

Worked examples

Example 1

Meera invests ₹10,000 at the start of each month for four months in a growth scheme. The NAVs on the four dates are ₹20, ₹25, ₹16 and ₹20. No loads apply. At the end of the fourth month the NAV is ₹22. Find the average cost per unit, the value of her holding and her absolute return.

Show the solution

Units in month 1 = 10,000 ÷ 20 = 500.
Units in month 2 = 10,000 ÷ 25 = 400.
Units in month 3 = 10,000 ÷ 16 = 625.
Units in month 4 = 10,000 ÷ 20 = 500.
Total units = 500 + 400 + 625 + 500 = 2,025. Total invested = ₹40,000.
Average cost = 40,000 ÷ 2,025 = ₹19.753 per unit. The simple average of NAVs is ₹20.25, so her cost is lower.
Closing value = 2,025 × 22 = ₹44,550.
Gain = 44,550 − 40,000 = ₹4,550. Return = 4,550 ÷ 40,000 × 100 = 11.375%.

Answer: Average cost ≈ ₹19.75 per unit; value = ₹44,550; absolute return = 11.38% (approx.).

Example 2

Ravi holds 30,000 units of a scheme bought at ₹40 per unit (₹12,00,000). He starts an SWP of ₹20,000 per month. The NAVs on the three withdrawal dates are ₹40, ₹50 and ₹40. No exit load applies. After the third withdrawal the NAV is ₹44. Find the units left, the total value including withdrawals, and his absolute return.

Show the solution

Units sold in month 1 = 20,000 ÷ 40 = 500.
Units sold in month 2 = 20,000 ÷ 50 = 400.
Units sold in month 3 = 20,000 ÷ 40 = 500.
Total units sold = 1,400. Balance units = 30,000 − 1,400 = 28,600.
Value of balance units = 28,600 × 44 = ₹12,58,400.
Total withdrawn = 3 × 20,000 = ₹60,000.
Total value = 12,58,400 + 60,000 = ₹13,18,400.
Gain = 13,18,400 − 12,00,000 = ₹1,18,400. Return = 1,18,400 ÷ 12,00,000 × 100 = 9.87%.

Answer: Units left = 28,600; total value = ₹13,18,400; absolute return ≈ 9.87%.

Exam tips

Draw the unit table even for a short question. It earns method marks and prevents slips.
Read the loads line first. If it says nil, say so in your answer. If it gives a load, apply it on the correct leg.
For comparison questions, end with a one-line conclusion naming the better option and the figure that proves it.
State whether your return is absolute or annualised. Most SIP questions in case form expect absolute return unless asked otherwise.
In case-scenario MCQs, find units first. Most options differ by the units or the closing value, so one clean table settles the answer.

Practice questions from Mutual Funds

SIP, SWP, STP and Scheme Comparisons in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

NISM CertificationsInvestment Options, SIP, SWP and STP

SIP, SWP, STP and Scheme Comparisons: frequently asked questions

What is the difference between SIP, SWP and STP?

SIP puts a fixed amount into a scheme at regular intervals. SWP takes a fixed amount out of a scheme at regular intervals. STP moves a fixed amount from one scheme to another within the same fund house.

What is rupee cost averaging?

It means investing a fixed amount each period, so you buy more units when NAV is low and fewer when it is high. Your average cost per unit, which is total invested ÷ total units, is then at most the simple average of the NAVs. It does not guarantee a gain.

How do I calculate SIP return in CA Final AFM?

Find total units, multiply by the closing NAV, and compare with the total invested. That gives the absolute return. If the question asks for an annualised rate, it will usually give a method or a simple approximation.

How do I answer a scheme comparison question?

Put each scheme on the same amount, period and loads. Compute final value or return for each and state the better one in a closing line. Show the working for every option.