There are multiple ways you can withdraw money from a mutual fund plan. Confused? Say you want to withdraw money from a mutual fund you were invested in, but you wish to receive them in bits and pieces at regular intervals.
Systematic Withdrawal Plan or SWP is one such method that allows you to do so.
In case you don’t want all the money in one go but wish to receive regular income from your investment, any best SWP mutual fund might help you with that.
Let’s first get into the basics of what it means.
Like mentioned before, SWP helps you to withdraw a fixed amount for a particular tenure. You can decide both the amount and the term. You can also pick the date on which you would like to receive the money.
Before we get into any more details of how SWP works, let’s understand how to pick the best SWP plan.
In this article
- How to Pick the Best SWP Plan?
- Best SWP Mutual Funds 2021
- Equity Funds
- Debt Funds
- Hybrid Funds
- Other Funds
- Factors to consider before opting for an SWP
How to Pick the Best SWP Plan?
Picking the best SWP plan is not the same as choosing any other mutual fund for investment; however, it’s not that different too. Essentially what you are doing is withdrawing from a mutual fund you are already invested in.
The SWP plan does not have any unique characteristics to it. Your SWP plan is a date, your choice of amount and periodicity.The main character here is the base mutual fund. So your primary research should go behind picking the best mutual fund for you that suits your investor profile.
One SWP plan cannot be better or worse than another, but one mutual fund scheme may or may not be far better than the other. So the question of how to pick the best SWP plan really should be how to choose the best mutual fund that suits your risk level, goals, financial status and needs. It also depends on when do you want to opt for SWP.
Here’s a blog that can help you with how to pick a mutual fund for yourself.
Click here: How to Pick a Mutual fund
Disclaimer: Here we have filtered the top five best mutual funds to invest for you who have returned the most in the past three years. If you have already invested in any of these or any other fund, you can check your dashboard to review the SWP facility.
Please note this is solely for information purposes and not a recommendation. Returns should not be the only or the main parameter to invest in a mutual fund. Please do the due diligence in research and pick mutual funds and asset classes that suit your investment profile.The list was last updated on February 4.
Best SWP Mutual Funds 2021
Equity funds are mutual funds that are mandated to invest maximum money in stocks of different companies. They derive their name and categorisation depending on the kind of stocks they are investing in. For example, large-cap funds invest in stocks of large-cap companies.
Here are some of the best lump sum investment plan for equity fund category:
Large Cap Funds
Large-cap funds invest some of the largest companies by market capitalization.
- Axis Bluechip Fund
- Canara Robeco Bluechip Equity Fund
- BNP Paribas Large Cap Fund
- Edelweiss Large Cap Fund
- LIC MF Large Cap Fund
Mid Cap Funds
- Axis Midcap Fund
- PGIM India Midcap Opportunities Fund
- Invesco India Midcap Fund
- Quant Midcap Fund
- Kotak Emerging Equity Fund
Multi cap funds are mandated to invest 25% each in small-, mid- and large-cap funds.
- UTI Equity Fund
- Quant Active Fund
- Canara Robeco Equity Diversified Fund
- Mahindra Manulife Multi-Cap
- ICICI Prudential Multi-Cap Fund
Equity-linked saving schemes (ELSS) provide tax relief under section 80 C.
- Quant Tax Plan
- Canara Robeco Equity Tax Saver
- Mirae Asset Tax Saver Fund
- Axis Long Term Equity Direct Plan
- JM Tax Gain Plan
Debt funds invest in bonds and money market instruments of companies. There are up to 15 sub-categories under debt funds. Here are some of the best mutual fund for lumpsum investment under the debt fund category:
Top Liquid Funds
Liquid funds invest in securities with maturity up to 91 days.
- ICICI Prudential Liquid Fund
- Quant Liquid Direct Plan
- Franklin India Liquid Fund
- Aditya Birla Sun Life Liquid Fund
- Union Dynamic Bond Fund
Top Banking and PSU Debt Funds
These funds lend to banking and public sector undertakings.
- Edelweiss Banking and PSU Debt Fund
- IDFC Banking and PSU Debt Fund
- Nippon India Banking and PSU Debt Fund
- Kotak Banking and PSU Debt Fund
- SBI Banking and PSU Debt Fund
Top Corporate Funds
These funds buy debt securities of companies.
- L&T Triple Ace Fund
- HDFC Corporate Bond Fund
- Aditya Birla Sun Life Corporate Bond Fund
- Sundaram Corporate Bond Fund
- Axis Corporate Debt Fund
Ultra Short Term Funds
Ultra short term funds invest in securities with maturity between 3 to 6 months.
- PGIM India Ultra Short Term Fund
- ICICI Prudential Ultra Short Term Fund
- DSP Low Duration Fund
- Aditya Birla Sun Life Savings Fund
- Mahindra Manulife Low Duration Fund
Hybrid funds are a combination of equity and debt investments.
Arbitrage Hybrid Fund
These funds use the arbitrage technique to invest. Arbitrage is a strategy that aims to take advantage of price differences.
- Mahindra Manulife Equity Savings Dhan Sanchay Yojana
- Nippon India Arbitrage Fund
- Edelweiss Arbitrage Fund
- BNP Paribas Arbitrage Opportunities Fund
- L&T Arbitrage Opportunities Fund
Balanced Advantage Fund
These funds have the advantage to invest across equity and debt without restrictions.
- Edelweiss Balanced Advantage Fund
- Union Balanced Advantage Fund
- ICICI Prudential Balanced Advantage Fund
- Aditya Birla Sun Life Balanced Advantage Fund
- IDFC Dynamic Equity Fund
Aggressive Hybrid Fund
Aggressive hybrid funds invest more in equity instruments than debt.
- Quant Absolute Fund
- BNP Paribas Substantial Equity Hybrid Fund
- Canara Robeco Equit Hybrid Fund
- Mirae Asset Hybrid Equity Fund
- DSP Equity and Bond Fund
Conservative Hybrid Fund
Conservative hybrid funds invest more in debt instruments than equity.
- Baroda Pioneer Conservative Hybrid Fund
- Canara Robeco Conservative Hybrid Fund
- Kotak Debt Hybrid Fund
- ICICI Prudential Regular Savings Fund
- BNP Paribas Conservative Hybrid Fund
- Kotak Gold Fund
- Axis Gold Plan
- DSP World Gold Fund
- Invesco India Gold Fund
- Aditya Birla Sun Life Gold Direct Fund
Read on to find out more on how SWP works that may help you to form an understanding about the product.
Factors to consider before opting for an SWP
If you have followed us till here, you must have understood that SWP is nothing but a facility to redeem your mutual fund units in regular intervals; and all of the above factors can be chosen by you.
Opt for an SWP only if you are looking for regular income from your mutual fund. If you don’t require money to come in regular intervals, you can opt for the lump-sum withdrawal. Monthly SWP is a popular form of SWP. You can decide how much amount you want to receive monthly.
You can also use the best SWP mutual fund to steer a retirement plan for yourself. For regular income post-retirement, you can chalk out a list of mutual funds of your choice and start an SWP from it post-retirement. If well planned, SWP can be excellent support for regular income after retirement. Reason being, there is an absence of regular income. Even if you have enough and more funds, some people may be used to the idea of receiving money in a regular fashion. This is where SWP comes in handy.
Taxation is an important aspect of every form of income, especially if you are using the best SWP for monthly income.
Every withdrawal will be subjected to the capital gains tax of the fund you are invested in. Hence, the capital gains tax of the fund you are invested in matters.
For example, in equity mutual funds, short term capital gains (less than 12 months) is taxed at 15% and long term (more than 12 months) capital gains are taxed at 10% if gains are more than 10%.
Mutual fund investments offer various options to make investments easy for all of us. Some features are useful for new professionals, millennials, retired persons, high and low-risk appetite and more. The best SWP for monthly income caters to a requirement wherein you can withdraw money from your mutual funds in instalments. This gives a regular income flavour to your mutual fund investments and might be extremely helpful for many. You can apply for an SWP from high-risk mutual funds, low-risk mutual funds or something that falls in the middle. The pivotal point here is that you should know if you need an SWP or not. The best SWP plans 2021 India will be a source of regular income from a mutual fund of your choice.
Disclaimer: The views expressed here are of the author and do not reflect those of Groww.
Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.