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How Daily STP Works?


Systematic Transfer Plan is a effective combination of debt and equity products.Normal process is to invest lumpsum amount in liquid fund and transfer fixed sum periodically in equity fund.Few days before I write about daily SIP facility.Thereafter I come to know the eagarness about the same from investors.So I think why not to put some real time results of daily STP invested by self.

Though we  know that the period of 6 months is very short and we can not lead to any conclusion,i have put it just as an idea for investors.

We invested Rs. 20,000 in liquid scheme of quantum mutual fund and started daily transfer of Rs.100 in Quantum Fund Of Fund scheme.When balance in liquid fund will become near to Rs. 5000 we will add more money in it .

STP start date was 5th Jan 2011.

Since Then the total calculation is like this:

Quantum Equity Fund Of Fund:

Initial Number Of units: Zero.

Number Of units accumulated as on 25th July 2011: 945.450.

Original Cost invested : 13,100.

Current Value: 13,480………………..(A)

Quantum liquid fund:

Original Cost: Rs.20,000

Current Value:Rs. 7,555…………………….(B)

 

Overall Current value:A + B= 13,480 + 7555 = Rs. 21,035………….(1)

If we check nifty position for two dates then:

Nifty on 5th jan: 6130.

Nifty on 25th July: 5640.

Nifty returns between two points:  -0.086 i.e  – 8.6%. i.e. if we have invested same amount  in NIFTY then capital today might be

=20,000 – (20,000*0.085)

=20,000 – 1700

=18,300………………………(2).

We compared it with monthly SIP of one of the famous fund.

Total 7 installments considered from 2nd January 2011 to 2nd July 2011 on 2nd of each month.Then

Total cost: Rs. 14,000/-

Total valuation on 26th July comes to be : Rs.13900.—————-(3)

If compare (1)  (2) and (3)we will find the advantage of investing in different market conditions.Now a question arises that whether SIP/ STP will always work? I think answer must be “NO”.It highly depends on how market revolves in future….and  all depend on period at which you are looking to book the money invested.


Category: Mutual Funds

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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