What about capital protection in STP

An investor invested Rs. 100,000 in BSL Dynamic Bond Fund, in Jan 2017, opted for SWP of Rs. 2,000 in quarterly mode. Time horizon is 10 years. Is the decision right? What about the projection of capital appreciation?

May 6, 2017 by Kalyan Som, Burdwan  |   Mutual Fund

We think, investing in a dynamic bond fund to do STP is not the right way for two reasons - 1) you are incurring exit load 2)for dynamic bond funds investment horizon should be 2-3 years. Liquid fund or ultra short term funds would have been better choices.

You have not mentioned the destination scheme, meaning which scheme you are transferring to from debt fund. Also, 10 years is too long a period for STP and if the market is rising continuously, you may not benefit much from this method. Giving estimate of capital projection for such a long period of STP is probably not possible.

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