What is ultra short term funds and how to do STP to midcap funds

Ultra-short term debt funds (previously known as liquid plus funds) are money market mutual funds with residual maturity of less than a year. Ultra short debt funds are slightly more volatile than liquid funds, but they also offer high degree of capital safety and stability of returns. Liquid funds have no exit load and redemptions are processed within 24 hours. Ultra-short term debt funds usually give higher returns than liquid funds. If you have money lying idle in your savings bank account, you can grow your money in ultra-short term debt funds.

To know more about ultra-short term funds and debt funds, do read this article https://www.advisorkhoj.com/company/Principal-Mutual-Fund/articles/How-to-select-the-right-debt-mutual-funds-for-your-portfolio:-Part-1

With regards to STP from ultra-short term funds to mid/small cap funds, you should first select the mid/small cap funds and then invest in the ultra-short term fund of the same AMC. Some of the top performing mid/small cap funds are Mirae Asset Emerging Bluechip Fund, Reliance Small Cap Fund, SBI Magnum Midcap Fund and DSP BlackRock Small and Midcap Fund.

Now, assuming if you were to invest in all these funds, you will have to select the ultra-short term funds of the same AMC and invest in it. Let us now see which are these ultra-short term funds are?

These are, Mirae Asset Savings Fund-Regular Savings Plan-Growth, Reliance Money Manager Fund-Growth Plan-Growth option, SBI Ultra Short Term Debt Fund-Regular Plan-Growth and DSP BlackRock Ultra Short Term Fund-Regular Plan.

You may invest the lump sum amounts in these ultra-short term funds and transfer a fixed amount weekly, fortnightly or monthly to the respective mid/small cap funds over a period of time.

Hope the above helps! Thanks for writing to Advisorkhoj !!