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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds

Which of the following is a feature of a Systematic Transfer Plan (STP) in a mutual fund?

A Systematic Transfer Plan periodically moves money from one scheme to another within the same fund house, commonly from a liquid or debt fund into an equity fund. Monthly redemption to a bank is an SWP, and monthly bank investing is an SIP.

  1. AMoney is transferred periodically from one scheme to another scheme of the same fund houseCorrect
  2. BUnits are automatically redeemed and paid to the investor's bank every month from a single scheme
  3. CThe investor invests a fixed amount in a scheme every month from the bank account
  4. DUnits are transferred between investors' demat accounts free of cost

Explanation

An STP moves a fixed or variable amount at set intervals from one scheme (often debt or liquid) to another (often equity) of the same fund house. Regular redemption to the bank describes an SWP and fixed bank investments describe an SIP.

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