ICICI Prudential Mutual Fund has introduced an upgraded systematic transfer plan (STP), which allows unitholders to transfer varying amounts from one source scheme to a selected target scheme at set intervals based on market valuations.
The plan's goal is to take advantage of market possibilities by dividing the corpus as and when they arise. Booster STP is a more advanced systematic transfer plan that allows unitholders to transfer varied amounts depending on market conditions.
What is STP?
SIP stands for Systematic Investment Plan, and it is a method of investing a set amount in a mutual fund plan at regular intervals. You could, for example, put $1,000 every month in a mutual fund. It's a methodical investment strategy that helps to mitigate the risk of market swings. It's a handy tool that helps you protect your money while also allowing you to build big wealth over time.
By taking advantage of rupee cost averaging and expanding your savings with compounded benefits, SIP investing can help you achieve your financial goals.
Based on the equity valuation index, Booster STP can modify the instalment amount from 0.1 to 5 times the base instalment amount.
Booster Systematic Transfer Plan
This feature, according to ICICI Prudential Mutual Fund, divides the investment corpus so that market opportunities can be accessed efficiently since smaller instalments are invested when valuations are greater and larger instalments are invested when valuations are lower.
When stock valuation is regarded as expensive, a tiny portion of the base instalment is invested through this enhanced STP. In contrast, if the valuation is considered low, the investment will have a larger worth. Unitholders will be obliged to pay a monthly base instalment that will be transferred to the target plan. The Equity Valuation Index is used to determine the variable amounts or real amounts transferred to the target plan.
To describe the feature, the business used the following example: If the initial instalment is Rs 1,000, the investment ranges from Rs10,000 to Rs 5,000,000 (0.1 times to five times) depending on market valuation. The multiplier (0.1 to five times) is calculated using the stock valuation index of the mutual fund firm.
Price-to-earnings (PE), price-to-book (PB), (G-Sec x PE), and market-cap to gross domestic product (GDP) or other parameters as defined by the AMC from time to time are all given equal weights in the Equity Valuation Index. The expanded systematic plan has three characteristics: seek the correct opportunity, seize the opportunity, and size the opportunity.