Top and best-performing SWP mutual funds

There are several mutual fund offerings in the market, and SWPs are one of them. SWP stands for “Systematic Withdrawal Plan.” SWP mutual funds let investors systematically withdraw amounts at specified intervals. Investors can thus plan for a steady income while reducing their tax burdens.

With SWPs, investors should consider “entry loads” and “exit loads.” Entry loads are the charges that apply to a new investor in the funds. Exit loads are the fees levied when an investor exits the fund.

Best SWP mutual funds in India

Any list of the best SWP mutual funds in India will probably include the following names. However, please remember that the list could vary with time as newer funds and scenarios emerge. While this list can help kickstart your research, don’t let it stop there.

1. SBI Equity Hybrid Regular Growth Plan

Let’s begin with our good old SBI. The SBI Mutual Fund (SBIMF) goes back 35+ years. In 2011, SBI MF entered into a shareholder agreement with AMUNDI Assessment Management (France).

Hybrid mutual funds are funds that invest in both equities as well as in debt instruments. With these mixed investments, hybrid plans offer investors the opportunity to create a more diversified portfolio.

This particular fund currently holds around 74% of the money as domestic equity instruments, of which around 49% are Large Cap stocks. Further, it holds around 21% in the form of debt, of which around 17% is in the form of government securities.
While there is no entry load, this fund carries an exit load of 1% if sold within a year.

2. ICICI Pru Equity and Debt Growth Plan

This fund is managed by the ICICI Prudential Asset Management Company Ltd., a joint venture company promoted by ICICI Bank and Prudential Plc, UK.

There is no entry load, but there is an exit load of 1%.

This offering is a fund with around 70% exposure to equities and 20% to debt securities. It aims at long-term appreciation even as a steady income is generated.

3. Canara Robeco Equity Hybrid Regular Growth Plan

The Canara Robeco Mutual Fund Company was started as CanBank Mutual fund in 1987. In 2007, Canara Bank partnered with Robeco, now a part of ORIX Corporation, Japan.

This growth plan was created in 1993. It aims to provide capital appreciation in the medium to long term, even as a steady income is generated.

There is no entry load. However, the fund has a 1% exit load in the first year of holding for exits exceeding 10% of the total holdings.

4. Franklin India Equity Hybrid Growth Plan

Franklin Templeton Investments (established in 1947) set up the Templeton Asset Management India Pvt Ltd company in 1996. The latter started the Templeton India Growth fund in that very year. The company has now grown and offers a diverse bouquet of financial services and mutual fund options to Indian investors.

The Franklin India Equity Hybrid Growth Plan Fund was started in 1999. This is also an aggressive growth fund, given that its exposure to equity investments goes up to 80% of the portfolio.

There is no entry load. As far as the exit load is concerned, there is none up to 10% holding in the first year. In excess of that, 1% will be charged within the first year.

5. Quant Absolute Fund Growth Plan

The 2008 global financial crisis spawned the birth and growth of Quant Group as a financial platform. The money that goes to this fund is invested across a portfolio of diverse equity (around 68–80%). The rest flows into debt instruments.
There is no entry or exit load, and calculations are based on the day’s net asset value.

Factors to consider before investing in the best SWP Mutual Fund

Investing in something as growth-focused as SWP Mutual Funds can be exciting. But you should not let that get in the way of your research. Remember to prioritize the following factors.

Your financial needs

The fund can provide a steady and stable income. However, the returns are not guaranteed. So you may want to factor that in when you are planning for your financial needs in the future.

Regular Income

You always need to ask yourself the following questions before making any kind of investment. Especially so with SWP Mutual Funds.

1. How much of a regular income will this investment give me?
2. What is periodicity?

Ensure that the regular income is an amount that would keep you happy and cover your costs.

Pension

Investors who wish to create their own pension fund can make a bulk investment in SWP Mutual Funds. They can lay out instructions regarding how much pension they would want each month. The mutual fund will, subject to the availability of the units in the investor’s account, convert the required number of units according to the NAV and arrange for the crediting of this pension each month. While all of this is simple enough, you need to make sure you do the needful to ensure it works.

Market situation

The fluctuations in the market conditions can be minimized to a certain extent, given the SWP’s portfolio investment pattern. However, it is best to buy these mutual funds when the market is doing well. Refrain from these investments during a bear market.

Tax implications

With an SWP, there is no TDS. However, the usual taxes for short-term capital gains and long-term capital gains are applicable here, too. You will need to factor this in before you make any investment decisions.

Conclusion

The best SWP for monthly income should let you withdraw money from your mutual funds in installments. You can also pick a plan and choose high-, mid-, or low-risk mutual funds. If SWPs sounds like a good option, it may be, but you need to do your research to make sure it is.

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