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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information

Which statement about a Systematic Withdrawal Plan (SWP) is correct?

In a Systematic Withdrawal Plan, the investor redeems a fixed amount or number of units at regular intervals from an existing mutual fund holding. Units are redeemed at the applicable NAV, so the investment reduces progressively; the income is not guaranteed by the fund.

  1. AThe investor redeems a fixed amount or number of units at regular intervals from an existing investmentCorrect
  2. BThe investor invests a fixed sum in the scheme periodically
  3. CThe investor switches the entire corpus to another AMC each month
  4. DThe fund pays guaranteed income each month irrespective of NAV

Explanation

An SWP lets the investor withdraw a specified amount at periodic intervals by redeeming units. Redemption is at the applicable NAV, so the number of units falls over time. Investing periodically describes an SIP, and no payout is guaranteed.

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