| More retailers are opting for the STP within mutual fund schemes, which enables them to switch between mutual fund schemes of the same fund house without paying any load. |
| Applicable entry load is only charged if the units are redeemed switched out within 365 days from the date of transfer in the transferee scheme. For switches within equity schemes, no load is charged. |
| "A lot of retail interest and increased number of smaller applications has prompted us to reduce the minimum subscription amount. The last one year, retail interest in debt schemes has picked up and around 10-25 per cent of our total debt inflows come from retail investors," said Mahendra Jajoo, vice-president and head (Fixed Income), ABN AMRO Mutual fund. |
| In fact, ABN AMRO mutual fund has lowered the minimum subscription under the switch-in option of its cash fund-regular to Rs 5000 from Rs 100,000 earlier. |
| Even within the STP, there is scope for transferring funds in various combinations. viz: from debt schemes to equity schemes, equity schemes to debt schemes and so on. |
| "Retail investors would usually switch from the safer asset (debt) to riskier asset (equity). Investors seeking to shift from debt schemes to debt schemes would probably be only doing it for profit booking," said Mohit Verma, chief investment officer, fixed income, JM Mutual fund. |
| Adds Nandkumar Surti, CEO of JP Morgan Asset Management, "Systematic transfer plans is aimed at retail investors who are vary of equity markets at the current levels. Investors are finding it an attractive option." Bulk investors typically move their money into liquid plus schemes to take advantage of the tax arbitrage, added Verma. |
| This budget had made it clear that liquid-plus funds and long-term floaters will attract only 20 per cent dividend distribution tax (DDT), which inclusive of the surcharge, comes to 22.66 per cent. |
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