Search
You're invited to try out the new version of Value Research Online. Click here to begin: https://beta.valueresearchonline.com

Which category of debt fund should I choose to set up an STP?

Dhirendra Kumar discusses the viable debt fund options for setting up an STP


  • TweetTweet
  • LinkedinLinkedin
  • FacebookShare
 

In the current scenario, which category of debt fund should be ideal to set up a systematic transfer plan (STP) into an equity fund. My investment horizon is five to 10 years.
- Mehta

Get updates from Value Research in your inbox

You should not look beyond a liquid or an ultra short-duration fund. The primary idea of doing an STP from a fixed income fund to an equity fund is to ensure that you do not end up investing a large sum of money at one go. A lump-sum investment in an all-equity fund may create a lot of anxiety. You also run the risk of catching a market high. So, averaging your investments while the other portion of your money is put in a fund simultaneously earning around seven to eight per cent return is a good proposition. You should not look for the best fund, as both liquid and ultra short-duration fund categories do not have a wide range of performance. Choosing an average fund instead of a best-performing one in these categories won't make a huge difference to your life.

comments powered by Disqus