In the ever-evolving financial landscape, creating a robust investment strategy for steady growth and wealth creation is essential. While multiple investment options are available to investors, Structured Withdrawal Plans (SWPs) remain a popular choice among those seeking steady income while maintaining a diversified portfolio.
With SWPs, you can withdraw a fixed amount from your mutual fund at regular intervals without any penalty. Also called Systematic Savings Plans (SSPs), these plans enable you to continue investing in the fund while also enjoying a fixed-income inflow. If you're looking to start investing in SWP mutual funds, you can select from a wide range of options. To make it easier, we've curated a list of the best SWP plans for 2023 that you must consider.
HDFC Hybrid Equity Fund is an open-ended hybrid fund that mainly invests in equity and related instruments. The fund has 65.21% investment in domestic equities of which 42.42% is in Large Cap stocks, 12.19% in Small Cap stocks. The fund has 31.05% investment in Debt, of which 9.88% in Government securities, 20.53% is in Low-Risk securities.
It aims to always maintain a reasonably diversified portfolio and mostly invests in companies which have reasonable growth prospects, sound financial strength, sustainable business models, and acceptable valuations that offer potential for capital appreciation. The minimum SIP in the fund is of Rs 100.
This fund is an open-ended dynamic asset allocation fund and is suitable for long term income. Launched in 2006, the fund aims to provide capital appreciation and income distribution to its investors by using equity and equity related securities and debt instruments.
The fund has 66.07% investment in domestic equities of which 46.89% is in Large Cap stocks, 8.24% is in Mid Cap stocks, 0.26% in Small Cap stocks. It has 19.17% investment in Debt, of which 8.18% in Government securities, 9.59% is in Low-Risk securities. The minimum amount you can invest in this fund is of Rs 500.
SBI Magnum Fund is an open-ended medium-term debt scheme and has a portfolio duration between 3 years and 4 years. The fund aims to provide investors an opportunity to generate attractive returns with moderate degree of liquidity through investments in debt and money market instruments.
The fund has 91.2% investment in Debt, of which 33.36% in Government securities, 50.86% is in Low-Risk securities. It is suitable for investors who want to invest for 1 to 3 years and are looking for alternative to bank deposits. Minimum SIP Amount applicable for this fund is Rs. 500
Axis Equity Saver Fund is an open-ended equity scheme which aims to generate capital appreciation, provide income from debt, be relatively less volatile and tax-efficient.
The fund has 65.75% investment in domestic equities of which 42.9% is in Large Cap stocks, 3.67% is in Mid Cap stocks, 1.14% in Small Cap stocks. The fund has 28.81% investment in Debt, of which 18.22% in Government securities, 10.05% is in Low-Risk securities.
The fund was launched in 2015 and has an expense ratio of 2.27%. The Current Net Asset Value of the fund is Rs 21.22 and it currently holds assets under management worth of Rs 929.6 crore.
This fund is an open-ended hybrid scheme which invests primarily in debt instruments. The fund has 19.98% investment in domestic equities of which 13.06% is in Large Cap stocks, 0.83% is in Mid Cap stocks, 0.84% in Small Cap stocks. The fund has 74.35% investment in Debt, of which 29.43% in Government securities, 44.89% is in Low-Risk securities.
The primary objective of the scheme is to generate regular income to make monthly payment to its unitholders and capital growth. This fund is suitable for you If you are a conservative investor with a moderate risk appetite. The Net Asset Value of the fund is Rs. 63.87.
To select the most suitable Structured Withdrawal Plan (SWP), you must consider some critical factors to ensure that the selected mutual plan aligns with your financial goals and risk tolerance. These include:
The market is dynamic with unpredictable fluctuations. So, before evaluating your options, it's important to assess the risk you are willing to take and for how long you wish to stay invested. Opt for a plan that balances consistent income generation and wealth preservation according to your investment style.
Different funds have different objectives and performance histories. Carefully examine their past performances and track records to make an informed decision. Analyse factors like their:
-Consistency in generating returns
-Performance during market fluctuations
-Ability to meet investment objectives
Check the expense ratio and exit load associated with the SWP plan. Select a fund with a competitive expense ratio and minimal exit load/additional fees to reduce their impact on your overall returns.
Carefully review the fund's portfolio to assess its asset allocation and diversification strategy. This will help you determine if it aligns with your risk profile and investment objectives. A balanced portfolio can help mitigate market risks and enhance the stability of your income flow.
Another important factor to consider before selecting a SWP mutual fund is the fund manager's expertise and track record. An experienced and skilled manager with a successful track record can positively influence the fund's performance and the overall success of the SWP plan.
Different funds might have different tax implications depending on investment techniques and asset allocation. Therefore, make sure to consider how taxes can impact your overall investment returns. Select a plan that offers tax benefits and aligns with your tax planning strategies.
SWPs are most suitable with hybrid and debt funds because they offer steady returns and are less risky than equity funds.
Set your withdrawal rate at or below the fund’s long-term average return. For example, if a fund gives an 8% average return, keeping withdrawals around 5%-6% is sustainable.
Yes, most mutual fund companies let investors choose the SWP withdrawal amount. They can also decide how often they want to withdraw the amount.
According to the 4% SWP rule, you must not withdraw more than 4% of your total retirement corpus annually to ensure that your savings last all through your retirement period.
A Systematic Withdrawal Plan (SWP) lets you withdraw a fixed amount of money from your mutual fund at regular intervals. Your main investment stays intact while you get a steady cash flow, without needing to sell the entire investment or move it elsewhere.
Yes, SWP withdrawals are taxed. If you withdraw from equity funds in less than a year, you have to pay short-term capital gains tax. For debt funds, if you withdraw fully before three years, it’s taxed based on your tax slab.
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03 April 2025
6 mins read
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