INNOVATIVE PRODUCT: HDFC FLEX STP- BUY MORE WHEN MARKET ARE LOW AND BUY LESS WHEN MARKET ARE HIGH

What is Systematic Transfer Plan (STP) and When is it suitable?

STP is a facility wherein unit holder(s) of designated open-ended scheme(s) of a Mutual Fund can opt to transfer a fixed amount at regular intervals to another designated open-ended scheme(s) of the same Mutual Fund, available for investment at that time. Normally, the amount is invested in a debt-oriented scheme from where the amount is transferred to an equity-oriented scheme. STP is suitable under various conditions. For investors, who have a lump sum

investible surplus say, receipts from bonus, legacy, sale of residential property, etc. but would not like to invest the same in an equity fund at one go, this is an ideal investment tool. Also, when the equity markets are volatile one would like to invest a certain amount of money, STP offers a chance to the investor to invest in the equity markets in a phased manner. STPs are also useful when the investor prefers to have the consistency of debt returns while slowly investing in equities to generate higher return

Presenting HDFC Flex STP- How it is different from regular STP?

Under the Flex STP, unit holders will be eligible to transfer {fixed amount to be transferred per installment or the amount as determined by the following formula [(fixed amount to be transferred per installment X number of installments including the current installment) - market value of the investments through Flex STP in the Transferee Scheme on the date of transfer] whichever is higher} on the date of transfer. • Invest more when the markets are down - Accelerated investments on the date of transfer in the chosen equity oriented fund when markets are down.

• In a bullish market, continue with normal STP - Aids in keeping the power of compounding on your side in the long term

• Automatic tactical asset allocation - Advantage of investing more at lower levels

• Active management of the investment portfolio

 

Objective of Flex STP

It helps investors to transfer their money from select debt/liquid schemes to growth option of select equity schemes of HDFC Mutual Fund similar to normal STPs. In case of falling markets, the investor is able to benefit by automatically transferring more money on the date of transfer from debt/liquid funds to equity schemes as chosen and this offers an automated route for tactical asset allocation.

 

Benefits of  HDFC Flex STP

1. HDFC Flex STP allows investors to take advantage of bearish phases in the market

2. At the same time, continue with regular STP and benefit from the power of compounding

3. Removes emotions from the decision making process

4. Initial investments in select debt/liquid funds enhance total returns

5. Take advantage of the market movements without hassles

6. Investments in schemes with a long term track record

What are the salient features of HDFC Flex STP?

HDFC Mutual Fund offers HDFC Flex STP with wide flexibility in order for the investor to plan his investments according to his financial goals. The following are the salient features:

1. Presently, Minimum Amount of Transfer is Rs. 500 for Daily Flex STP,

Rs. 1,000 for Weekly & Monthly Flex STP and Rs. 3,000 for Quarterly Flex STP.

2. Frequency of transfer under Flex STP:

• Daily • Weekly • Monthly • Quarterly

3. Minimum amount of unit holder’s balance or minimum amount of application at the time of Flex STP enrolment in the Transferor Scheme: Rs. 12,000.

4. Minimum number of installments for enrolment under Daily Flex STP : • Minimum of 12 installments where instalment amount is less than Rs. 1,000/-.

• Minimum of 6 installments where instalment amount is equal to or greater than Rs. 1,000/-.

Minimum of 6 installments for enrolment under Weekly and Monthly Flex STP and 2 installments for Quarterly Flex STP.