Boost your mutual fund portfolio with these options

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For the investors although mutual funds offer great returns over the long-term period, however, there are times when investors cannot maintain consistency while investing in mutual funds during their SIP tenure. The current pandemic has brought upon medical expenses on many families, so people have been seeking loans or breaking their investments to manage those costs.

According to Association of Mutual Funds in India (AMFI) data, the debt-oriented categories witnessed significant net outflows of Rs 44,512.04 crore for the month of May 2021. This outflow was primarily due to huge net outflows of Rs 45,447.36 crores from Liquid Fund category and a net outflow of Rs 11,573.01 crores from the Overnight Fund categories. This could be due to more and more investors are pulling out their short-term money parked in these funds for their daily activities.

Mutual fund houses now offer features that ensure an investor does not suffer even when he or she has not been able to pay SIPs on scheduled dates.

SIP Pause

Under SIP Pause, an investor who has not been able to invest consistently has an option to stop the ongoing SIP and start again. This can be done by filling the forms and sending them to mutual fund companies.

This facility is offered free of cost and the investors are not charged by their banks or mutual fund house during the pause duration. To initiate the pause option, the mutual fund investors have to submit a SIP pause application two days early before their SIP date. One important thing is to remember that this facility is offered only once during the investor’s tenure of SIP. Also, once the pause period is over the SIP restarts automatically. Lastly, not all mutual fund houses are offering this facility and one needs to check before investing in any SIP plan.

SIP Booster

Under SIP Booster, also known as Top-up, an investor can increase SIP amount at a pre-determined time interval. The booster option increases the amount of the SIP instalment by a fixed amount at pre-defined intervals.  Also, in case if an investor has an additional surplus amount to invest in, he should not book multiple SIP’s and instead and use this option to achieve their financial goals.

The facility allows investment of a minimum of Rs 500 and in multiples of Rs 500 only.  For example: If an investor has an existing SIP in one mutual fund scheme for Rs 5,000 a month till December 2030. With SIP booster, an investor can increase this SIP value by Rs 1,000 every six months up to a maximum value of Rs 10,000.

Systematic Transfer Plan (STP)

Investors can use this option to maximise the benefits from the market. This option allows investors to move a pre-determined amount of money at periodic intervals from one scheme to another mutual fund scheme. For instance, rather than deploying the entire amount at one go into say equity mutual funds, one can invest in a liquid or ultra-short-term fund and then do a monthly STP into an equity diversified fund of one’s preference and risk appetite.

STP ensures that the investment is staggered to average out the cost of investment and investors should not be concerned too much with market valuations during the time of investment. STP facility is available with most of the fund houses and also on their online platform for convenience.