Top 10 Mutual Funds for STP Investment

Mutual funds have long been the preferred financial instruments for investors looking to invest in the stock market without managing their portfolios actively. But despite being handled by experts, these funds can be risky as they're prone to market volatility.

A Systematic Transfer Plan (STP) in mutual funds allows you to maximize returns while managing risk effectively. It offers a balanced approach to wealth creation and asset allocation. In this comprehensive guide, we'll understand STP investments and list the top ten mutual funds for STP investments.

What is STP?

STP is a systematic investment strategy that allows you to transfer a fixed amount of funds from one mutual fund to another. It is an excellent strategy if you are looking to diversify your portfolio or manage market risk effectively.

For example, suppose you have Rs. 1 lakh and want to invest it in an equity scheme. However, since equities can be risky, you don't wish to invest the entire lump sum. In this case, you can invest this lump sum amount in a debt fund and opt for a Systematic Transfer Plan (STP).

With this plan, you can regularly transfer a fixed amount from the debt fund to the equity scheme. This prevents your money from being exposed to high equity risk at once and allows you to regularly invest in the equity market.

10 best STP mutual funds

With multiple investment options in the market, identifying the best STP mutual funds that align with your financial objectives can often be difficult. To help you get started, here is a list of the best debt funds for STP that you can consider:

1. Bank of India Short Term Income Fund

This short-term mutual fund scheme was launched in January 2013. With an expense ratio of 0.6% and Rs. 93 crores worth of assets under management, the Bank of India Short Term Income Fund Direct-Growth scheme has delivered impressive average annual returns of 6.58% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

2. Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund

Launched in February 2022, this direct growth scheme has Rs. 2,484 crores worth of assets under management and an expense ratio of 0.2%. The Kotak Nifty SDL Apr 2032 Top 12 Equal Weight Index Fund has delivered average annual returns of 5.30% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 100.

3. SBI Magnum Medium Duration Fund

The SBI Magnum Medium Duration Fund Direct-Growth was launched in January 2013 and has Rs. 7,043 crores worth of assets under management. It is a mid-duration scheme with an expense ratio of 0.65% and has delivered average annual returns of 9.02% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

4. ICICI Prudential Nifty SDL Dec 2028 Index Fund

This target maturity MF scheme was launched in October 2022. It is a medium-sized fund with an expense ratio of 0.2% and Rs. 851 crores worth of assets under management. The ICICI Prudential Nifty SDL Dec 2028 Index Fund Direct-Growth has delivered average annual returns of 8.00% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 1,000.

5. HSBC Medium Duration Fund

Launched in 2015, this medium-duration MF scheme has Rs. 688 crores worth of assets under management with an expense ratio of 0.4%. HSBC Medium Duration Fund Direct-Growth has delivered average annual returns of 7.73% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

6. BHARAT Bond FOF - April 2031

BHARAT Bond FOF - April 2031 is another direct growth debt mutual fund launched in July 2020. It is a medium-sized fund with Rs. 4,469 crores worth of assets under management and an expense ratio of 0.06%. The scheme has delivered average annual returns of 4.60% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 1,000.

7. BHARAT Bond FOF - April 2032

The BHARAT Bond ETF FOF - April 2032 Direct-Growth was launched in December 2021. It is a medium-sized MF scheme with an expense ratio of 0.06% and Rs. 4,178 crores worth of assets under management. The debt FoF mutual fund has delivered average annual returns of 4.48% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 1,000.

8. SBI Magnum Income Fund

The SBI Magnum Income Direct Plan-Growth was launched in January 2013. It is a medium to long-duration MF scheme with an expense ratio of 0.8% and Rs. 1,678 crores worth of assets under management. The SBI Magnum Income Fund has delivered average annual returns of 8.10% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

9. Edelweiss CRISIL IBX 50:50 Gilt Plus SDL April 2037 Index Fund

This is another target maturity mutual fund launched in September 2022. It is a medium-sized fund with Rs. 805 crores worth of assets under management and an expense ratio of 0.18%. Since its launch, the fund has delivered average annual returns of 8.45%. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

10. ICICI Prudential Short Term Fund

This short-duration MF scheme was launched in January 2013. The ICICI Prudential Short Term Fund Direct Plan-Growth has a whopping Rs. 18,689 crores worth of assets under management and an expense ratio of 0.4%. It has delivered average annual returns of 8.53% since its launch. You can invest in this MF scheme with a minimum lump sum of Rs. 5,000.

Start STP investments in mutual funds with Tata Capital

These 10 debt funds are excellent options for starting an STP in mutual funds. Investing in them and transferring small amounts to equity funds periodically will help you create wealth sustainably and achieve financial stability.

Visit the Tata Capital Moneyfy website to know more or download the Moneyfy's mutual fund investment App and start your STP investment today.