Economics · Mutual Fund Regulations
Under a Systematic Transfer Plan (STP) in mutual funds, an investor transfers a fixed amount from a source scheme to a target scheme within the same fund house. According to SEBI regulations, which statement correctly explains the applicability of exit loads?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Each transfer under an STP is treated as a redemption from the source scheme, and exit loads apply if the investment period falls within the specified load window of the source scheme.✓
- 2Exit load is automatically waived if the initial principal investment in the source fund has completed 6 months.
- 3An STP is equivalent to a Systematic Investment Plan (SIP) and is legally exempt from all entry and exit loads.
- 4All STP transfers are statutorily exempt from exit loads as they are classified as internal adjustment transactions.
Correct answer
Each transfer under an STP is treated as a redemption from the source scheme, and exit loads apply if the investment period falls within the specified load window of the source scheme.
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