Contents
- The need for best SWP Plans
- How do an SWP Plans work
- Tax Implications of SWP Plans
- Best SWP Plans to invest
- Best SWP Plans-Details
- HDFC Short Term Debt Fund – Regular – Growth
- Indiabulls Liquid Fund – Regular – Growth
- Franklin India Ultra Short Bond Fund – IP – Growth
- Aditya Birla Sun Life Corporate Bond Fund – Regular – Growth
- Indiabulls Short Term Fund – Regular – Growth
- DHFL Pramerica Short Maturity Fund – Regular – Growth
- Aditya Birla Sun Life Floating Rate Fund – Regular – Growth
- HDFC Corporate Bond Fund – Regular – Growth
- SBI Short Term Debt Fund – Regular – Growth
- Kotak Banking & PSU Debt Fund – Regular – Growth
Systematic Withdrawal Plan is used to cover your investment from a mutual funds scheme in a phased manner. Unlike lump-sum withdrawals, SWP permits you to withdraw money in portions. It can be observed as the opposite of SIP. In best SWP plans, you channelize your investments from a scheme to the savings bank account. It is one of the strategies to deal with market variations.
With the Systematic Withdrawal Plan, you can customize the cash flow as per your demand. You can choose to either remove just the capital gains on your investment or a fixed amount. This way you will have your money still funded in the scheme. But you will also be able to obtain regular income and returns. The money you are withdrawing can be used for reinvesting in some other fund or can be preserved by you in the form of cash.
The need for best SWP Plans
Mutual Funds investment always face market inconstancies. It means that these inconstancies may impact the fund’s NAV negatively. Especially, when an individual is addressing a goal, the fund returns can be consumed if not withdrawn on time. Thus, with the help of an SWP, you can time your withdrawals as per the financial needs. If your goal demands to be financed in a phased manner, then you can opt for an SWP. Best SWP plans will assure the availability of the funds at the right time. In this way, your goal attainment will not get delayed due to a cash crisis.
SWP also helps investors who want a secondary income in addition to their pay from the job. With SWP, you as an investor can generate a flow of income from your investment that is regular. If you seek to have cyclic incomes for your travel or other needs, this is a great way to set this provision. It should be designed in such a way that when you need cash the most, it is available.
How do an SWP Plans work
When you pick an SWP Plans, it influences your mutual fund account as well. It is essential to know that SWP plans are not equal to starting a fixed deposit account in a bank where you get monthly interests. With a fixed deposit, the corpus value is not impacted when you remove the interest but in the case of a systematic withdrawal plan in mutual fund schemes, the value of your fund is decreased by the number of units you withdraw.
Tax Implications of SWP Plans
The redemption by a systematic withdrawal plan is subject to taxation.
In case of debt funds, if your holding period is less than 3 years, then the value that you withdraw will form a part of your income. It will then be taxed according to your income slab. On the other hand, if the holding period is more than 3 years, then the long-term funds’ gains will be charged at 20% with indexation.
In case of equity funds, if your holding time is less than 1 year, then the withdrawn amount will be charged at the rate of 15%. On the other hand, if the holding duration is more than 1 year, then the long-term capital gains will be taxed at 10% without indexation.
An open-ended fund gives you the option of redeeming the investment or modifying it at any time. You can also read about Tax planning.
Best SWP Plans to invest
Here are the 10 best funds you can pick to start an SWP.
| Fund Name | 1 Year | 3 Year | 5 Year | Category | Risk |
|---|---|---|---|---|---|
| HDFC Short Term Debt Fund – Regular – Growth | 9.11% | 7.74% | 8.31% | Debt (Short Duration) | Moderately Low |
| 7.33% | 7.11% | 7.68% | Debt (Liquid) | Low | |
| 9.68% | 8.89% | 9.21% | Debt (Ultra Short Duration) | Moderate | |
| 10.16% | 8.11% | 8.7% | Debt (Corporate Bond) | Moderately Low | |
| 8.73% | 7.4% | 8.1% | Debt (Short Duration) | Low | |
DHFL Pramerica Short Maturity Fund – Regular – Growth | -5.61% | 2.68% | 5.15% | Debt (Short Duration) | Moderate |
| 8.69% | 7.92% | 8.39% | Debt (Floater) | Moderately Low | |
| 10.76% | 8.28% | 8.77% | Debt (Corporate Bond) | Moderately Low | |
| 8.92% | 7.33% | 8% | Debt (Short Duration) | Moderately Low | |
11.02% | 8.27% | 8.44% | Debt (Banking & PSU) | Moderately Low |
Best SWP Plans-Details
HDFC Short Term Debt Fund – Regular – Growth
This is HDFC Short Term Debt Fund – Regular – Growth was launched on 25-Jun-2010. It is a debt fund with very low risk and has given a return of 8.68% since its launch.
| Rating by WealthBucket | 5 Star |
| AUM | ₹7992 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹500 |
| Performance w.r.t its Benchmark | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch |
| Expense Ratio | 0.4% |
| Exit load | NIL |
| Type | Open-Ended |
HDFC Mutual Fund started its mutual funds on 30/06/2000 and its managing total assets of ₹2,70,046 Cr. It is ranked at 2 as per total assets at the end of 30th Sep 2017. It is the largest asset management company (AMC) in the country (as per average assets under management as on 31 December 2018).
If you want to invest for a shorter duration, say for 3 months or more, this is one of the best debt mutual funds for you to invest in. Short term funds invest in papers like Commercial Paper (CPs) and Certificate of Deposit (CDs).
Indiabulls Liquid Fund – Regular – Growth
This is a liquid mutual fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 8.29% since its launch.
| Rating By WealthBucket | 3 Star |
| AUM | ₹3256 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹500 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Liquid since its launch. |
| Expense Ratio | 0.2% |
| Exit Load | NIL |
| Type | Open-Ended |
Indiabulls Mutual Fund started its mutual fund on 24/03/2011 and its managing total assets of Rs. 10,577 Cr. It is ranked 24 as per total assets at the end of 30th Sep 2017.
This liquid fund can be easily converted in to cash that too within a working day or two. Liquid funds invest in highly liquid money market securities like Commercial Paper (CPs), Treasury Bills and Certificate of Deposit (CDs).
They invest in instruments with a maturity period of up to 91 days.
Franklin India Ultra Short Bond Fund – IP – Growth
This is an ultra-short bond fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 9.53% since its launch.
| Rating By WealthBucket | 5 Star |
| AUM | ₹19569 Cr |
| Minimum SIP | ₹1000 |
| Minimum SWP | ₹1000 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Liquid since its launch. |
| Expense Ratio | 0.52% |
| Exit Load | NIL |
| Type | Open-Ended |
Franklin Templeton Mutual Fund started its mutual fund on 19/02/1996 and its managing total assets of ₹95,716 Cr. It is ranked at 8 as per total assets at the end of 30th Sep 2017. This fund invests in short-term debt securities with some small portion in long-term securities. The returns in this category are similar to the returns offered by short-term funds.
Aditya Birla Sun Life Corporate Bond Fund – Regular – Growth
This is a short term debt fund launched on January 1, 2013. It is a debt fund with low risk and has given a return of 8.88% since its launch.
| Rating by WealthBucket | 4 Star |
| AUM | ₹15575 Cr |
| Minimum SIP | ₹100 |
| Minimum SWP | ₹1000 |
| Performance w.r.t. its performance | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch. |
| Expense Ratio | 0.39% |
| Exit Load | NIL |
| Type | Open-Ended |
Birla Sun Life Mutual Fund started its mutual fund on 23/12/1994 and its managing total assets of ₹2,24,938 Cr. It is ranked at 4 as per total assets at the end of 30th Sep 2017.
This scheme aims to generate current income and capital appreciation from a portfolio that invests 100% in debt and money market securities.
With an asset size topping ₹ 19,445 crores, the fund is the most popular fund in the category. The fund usually relies more on corporate debt than sovereign debt.
Indiabulls Short Term Fund – Regular – Growth
This is a short term debt fund launched on September 13, 2013. It is a debt fund with low risk and has given a return of 9.50% since its launch.
| Rating by WealthBucket | 4 Star |
| AUM | ₹506 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹500 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch. |
| Expense Ratio | 1.48% |
| Exit Load | NIL |
| Type | Open-Ended |
Indiabulls Mutual Fund started its mutual fund on 24/03/2011 and its managing total assets of Rs. 10,577 Cr. It is ranked 24 as per total assets at the end of 30th Sep 2017.
DHFL Pramerica Short Maturity Fund – Regular – Growth
This is a short term debt fund launched on January 1, 2013. It is a debt fund with low risk and has given a return of 9.46% since its launch.
| Rating by WealthBucket | 2 Star |
| AUM | ₹185 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹1000 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch. |
| Expense Ratio | 1.33% |
| Exit Load | NIL |
| Type | Open-Ended |
DHFL Pramerica Mutual Fund started its mutual fund on 13/05/2010 and its managing total assets of ₹25,191 Cr. It is ranked at 15 as per total assets at end of 30th Sep 2017.
The objective of this scheme is to generate a steady return with low to medium market risk by investing in a mutual fund portfolio of short-medium term debt and money market securities. There will be 65-100% allocation to instruments with an average maturity up to 18 months and up to 35% allocation to instruments with an average maturity greater than 18 months.
Aditya Birla Sun Life Floating Rate Fund – Regular – Growth
This is an ultra-short bond fund launched on January 1, 2013. It is a debt fund with very low risk and has given a return of 9.01% since its launch.
| Rating by WealthBucket | 5 Star |
| AUM | ₹5841 Cr |
| Minimum SIP | ₹1000 |
| Minimum SWP | ₹1000 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Liquid since its launch. |
| Expense Ratio | 0.38% |
| Exit Load | NIL |
| Type | Open-Ended |
Birla Sun Life Mutual Fund started its mutual fund on 23/12/1994 and its managing total assets of ₹2,24,938 Cr. It is ranked at 4 as per total assets at the end of 30th Sep 2017.
This fund invests in short-term debt securities with some small portion of long-term securities. The returns in this category are similar to the returns offered by short-term funds.
The objective of this scheme is to generate regular income through investment in a portfolio comprising substantially of floating rate debt/money market instruments, it may also invest a portion of its net assets in fixed-rate debt securities and money market instruments.
HDFC Corporate Bond Fund – Regular – Growth
This is an income debt mutual fund launched on January 1, 2013. It is a debt fund with low risk and has given a return of 8.70% since its launch.
| Rating by WealthBucket | 4 Star |
| AUM | ₹12258 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹500 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Composite Bond since its launch. |
| Expense Ratio | 0.45% |
| Exit Load | Open-Ended |
HDFC Mutual Fund started its mutual fund on 30/06/2000 and its managing total assets of ₹2,70,046 Cr. It is ranked at 2 as per total assets at the end of 30th Sep 2017.
In income funds, investors invest their money in debt instruments like corporate debentures and government securities.
Income funds are for investors with a high-risk appetite It works well for long-term investments since there is a high risk of change in interest rates.
The scheme seeks to generate regular income through investments in debt/money market instruments and government securities with maturities not exceeding 60 months.
SBI Short Term Debt Fund – Regular – Growth
This is a short term debt fund launched on January 1, 2013. It is a debt fund with low risk and has given a return of 8.63% since its launch.
| Rating by WealthBucket | 3 Star |
| AUM | ₹7064 Cr |
| Minimum SIP | ₹500 |
| Minimum SWP | ₹500 |
| Performance w.r.t. its benchmark | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch. |
| Expense Ratio | 0.84% |
| Exit Load | NIL |
| Type | Open-Ended |
SBI Mutual Fund started its mutual fund on 29/06/1987 and its managing total assets of ₹1,88,455 Cr. It is ranked at 5 as per total assets at the end of 30th Sep 2017.
Kotak Banking & PSU Debt Fund – Regular – Growth
This is a short term debt fund launched on February 3, 2014. It is a debt fund with low risk and has given a return of 8.83% since its launch.
| Rating by WelathBucket | 3 Star |
| AUM | ₹1617 Cr |
| Minimum SIP | ₹1000 |
| Minimum SWP | ₹1000 |
| Performance w.r.t. its Benchmark | Has consistently outperformed its benchmark Crisil Short-Term Bond since its launch. |
| Expense Ratio | 0.52% |
| Exit Load | NIL |
| Type | Open-Ended |
The objective of this scheme is to generate risk-free returns through investments in sovereign securities. The savings plan (D) will provide regular dividend payouts. A portion of the fund will be invested in the interbank money market to meet the liquidity requirement.
Kotak Mahindra Mutual Fund started its mutual fund on 23/06/1998 and its managing total assets of ₹1,10,832 Cr. It is ranked at 7 as per total assets at the end of 30th Sep 2017.
We at WealthBucket will assist you to save by your extra money into various types of mutual fund schemes. It can be equity mutual funds, debt mutual funds, short-term mutual funds or in small-cap mutual funds. For more services related to mutual fund investments, you can ring at +91 9999379929 or mail us at contact@wealthbucket.in.
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In the tables mentioned above, Mutual Funds are compared with different forms of schemes based on their tax benefits, min. investment, Exit load, expense ratio, AUM, minimum SIP, etc.
