FundsIndia becomes the first financial services platform in the country to offer value-averaging transfer plan to its investors.
A quick introduction

VTP is a close cousin of VIP, the value-averaging investment plan. VIP seeks to average the entry of investments into the equity market based on the performance of market (as reflected in the chosen equity mutual fund scheme) based on the value-averaging algorithm. You can read more about the value-averaging algorithm and how it is employed by us by following this link

VTP employs the same algorithm as VIP. The only difference is the investment mechanism. Instead of funding the monthly investment from a bank account, with VTP, an investor can fund it from their existing investment in another scheme in the same fund family - say, a debt or liquid scheme.


How to setup a VTP?

There are two ways to setup a VTP in your account.

Bulk investment method

An investor could invest a bulk amount in a debt or a liquid scheme, preferably one without any exit load. They can then choose an equity scheme (growth or dividend-reinvestment plans only, just like in VIP) and setup the VTP from the first scheme to the equity scheme. Similar to VIP, the investor would need to specify an opening investment and a monthly maximum amount to transfer from the source scheme.

SIP method

Alternately, the investor could setup a SIP into a debt or a liquid scheme just like above. The rest everything is same as the bulk investment method above. Please note that you would need to have a gap of 5 days between your SIP date and the VTP date so that we can be sure that the investment has been made in your SIP scheme and that your transfer will not fail due to lack of funds.


What are the benefits?

There are a couple of important benefits of doing VTP:

  • If using the SIP method above, then the monthly outflow from the bank account remains constant. With a simple VIP, the monthly out flow could be a variable amount.
  • The excess amount, if any, that is not invested in the equity scheme, stays invested in the (debt) market and does not lie follow in the bank savings account.
Operational note

Please note that when you setup a VTP, the first transfer takes place in the next immediately available transaction window. The subsequent transfer takes place in the next calendar month and so on.

Happy investing!