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Can you please explain the difference in STP Flex STP and Value STP

Can you clarify the difference between STP, flex STP and value STP. Which one is better? Is Value Cost Averaging is better option to Rupee Cost Averaging for a long term horizon?

Sep 6, 2016 by SS Nath, Ahmedabad  |   Mutual Fund

STP is a mode of systematic investing wherein you transfer a fixed amount at a fixed interval (weekly, fortnightly, monthly or quarterly) from one fund to the another. For example – you have invested, say a lump sum amount of Rs. 1.00 Lac in ICICI Prudential Liquid Fund and transferring say, Rs. 1000 per week to ICICI Prudential Value Discovery Fund, this will be called STP. To know how exactly the STP can work, you might like to check our STP Calculator https://www.advisorkhoj.com/mutual-funds...

Flex STP and Value STP works on the same concept. However, different AMCs have conceptualised this concept by offering different ways of investing through these STPS. One of the concept is that even though you decide a minimum fixed amount to be transferred from one fund to another at a pre decided interval, the Flex or Value STP checks if the market value of your investments is more than the cost price of the instalments made so far. If the market value of the investments is higher than the cost price of the investments made so far, the pre determined fixed instalment amount gets invested. However, if the market value is less than the cost value of your investment, then amount transferred will be more then the pre-decided amount.

Effectively, in a Flex or Value STP, the investor puts more money when the markets are low and less when the markets is up.

You need to check the various kind of Flex or Value STPs offered by various AMCs in case you plan to start the same –

http://www.icicipruamc.com/stp-mutual-fund...

https://www.sbimf.com/Services...

http://www.hdfcfund.com/InvestPlans...

With regards to your query if Value Cost Averaging is better option to Rupee Cost Averaging for a long term horizon? Frankly speaking, we could not get your point. In the long term one should invest in such a way that one benefits from rupee cost averaging and that is why concept like SIP, STP and SWP have become popular.

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