Booster STP schemes provides better returns to investors even when the stock market is down

Mutual funds provide better returns but there is a risk if the stock market faces an adverse situation. This is why people invest in Booster STP schemes.

This scheme will give you better returns even when the stock market is facing adverse situation

Booster STP Scheme

Booster STP stands for systematic transfer scheme. The person holding the unit can transfer a variable amount from one scheme to another scheme. This transfer can be done at defined intervals. The investors are required to provide a base amount that can be transferred to another scheme. E.g. If in March 2022, the UEUBAF level is 34 per cent and the investor has selected the base amount for the booster STP scheme as Rs. 10000. Then, the investor can transfer Rs. 4000 to the target scheme from the source scheme on the STP date in April 2022. The Booster STP instalments will be paid monthly and the minimum instalments can be 6 instalments.

Also read: Booster STP and how it works

Watch this video to know more about Booster STP:

Better returns even in bad situations

The opposite situation could be seen in the stock market these days. The Bombay stock exchange has fallen by several thousand points. The booster STP schemes were giving some returns even then. For e.g., if an amount of Rs. 12 lakhs would be invested by an investor in ICICI Prudential’s booster STP in the month of July 2021. By now, the principal would amount to Rs. 12.13 lakh. However, if the same amount was invested in normal STP then, it would have come down to Rs. 11.20 lakh. If we compare Booster STP to normal STP, the booster STP has an advantage of 8.29 per cent.

What is STP?

STP is an abbreviation for Systematic Transfer Plan. However, Booster STP provides better returns as compared to normal STP. The Booster STP scheme is invested in instalments that range from 0.1 to 5 times the principal amount which depends on the equity’s valuation index. It is shown by the statistics that during the recession of 2008 when the markets of the world were suffering a downtrend, or during the European crisis and Covid, Booster STP got more investments.

Click here, to know about liquid mutual funds.

Better returns in Nifty

Examining the last 5 years’ data in the index of Nifty 50, it is found that a CAGR of 11.9 per cent was given by the Booster STP whereas normal STP gave only 9.8 per cent. STP booster returned 12.5 under the Nifty 50 index and normal STP returned 10.1.

Conclusion

Booster STP gives better returns as compared to normal STP. They even provide returns when the stock market is facing adversities. It is probably safer to invest in Booster STP. The amount is invested in instalments and could be transferred from one scheme to another.

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