In Systematic Transfer Plan, a fund house allows investors to invest a lump sum amount in one mutual fund scheme and transfer regularly a pre-defined amount into another scheme.
STP is of three types: Fixed, Flexi and Capital Appreciation. A fixed STP is where investors take out a fixed sum from one investment to another. A capital appreciation STP is where investors take the profit part out of one investment and invest in the other. In Flexi STP, the investor has a choice to transfer a variable amount. The fixed amount will be the minimum amount and the variable amount depends upon the volatility in the market.
