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Transfer Expenses

Check when and how to transfer from one plan to another and the cost involved

I want to transfer my investments in Magnum Global Fund to Magnum Contra through the systematic transfer plan (STP). I paid premium via the systematic investment plans (SIPs) from September 2007 to July 2009. What would be the nature of the exit load and will the Securities Transaction Tax (STT) be charged, even though there is no actual outflow of funds?

Prabha Narayan

When you transfer or redeem units from a fund, it is made on a first-in-first-out (FIFO) basis. This means that the units issued in the first instance will be redeemed/transferred first. Moreover, exit load is very much applicable to redemptions or transfers.

Since your initial investments were made in September 2007, they have already completed more than a year’s worth of continuity and will not be subject to any exit load. But if your transfer amounts are high and units issued in the recent past have to be redeemed, then the load will apply.

STT will be applicable in this case as well. Magnum Global is an equity-oriented fund. When you transfer units to another fund, you sell units back to the mutual fund. As is the case with redemptions, it will be subject to STT of 0.25 per cent.

When transferring from one equity fund to another, you need not opt for STP. STP is more effective when transfer is to be made from one asset class to another, like from debt to equity or vice versa.

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