STP

An STP (Systematic Transfer Plan) moves a fixed amount from one mutual fund scheme to another at a regular interval, usually from a liquid or debt scheme into an equity one. It exists for the moment you hold a lump sum but do not want to commit it to equity on a single day. The money waits in the lower-volatility scheme while instalments transfer across, giving the same staggered entry an SIP (Systematic Investment Plan) provides. Each transfer counts as a redemption, so exit load and capital gains apply to the source scheme.