Is there a mutual fund plan that combines the advantages of SIP and SWP? Finally, the answer is “yes”. Baroda BNP Paribas Mutual Fund has announced a new plan called Lakshya SIP. It is significant since it has been designed to roll two preferred modes of investment Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP).
Both SIP and SWP are extremely popular modes of investment and withdrawal in and from mutual funds. However, this form of a design drawing on the benefits of both don’t appear to be quite new in India. Let’s find out what the scheme is about.
SIP for a defined period, followed by SWP
First an SIP and then a SWP – that’s the basic architecture Baroda BNP Paribas Mutual Fund has followed. Initially, every participating investor would put in money as they do in a SIP account for pre-defined periods. These will be 8, 10, 12, or 15 years. They can contribute monthly amounts in any equity-linked mutual fund schemes from the Baroda BNP Paribas Mutual Fund stable.
After that chosen period of SIP investments is complete, the total sum generated in the SIP accounts will be shifted to a hybrid scheme, which will be chosen by the investor. With this the second phase of the scheme will begin and a SWP will commence to generate a steady monthly income.
Room for flexibility in Lakshya SIP
However, the scheme is not rigid and room foro flexibility. It will offer top-up options for the investors. They can raise their SIP amounts to increase the eventual capital. Investors can use this feature to increase their investment with their growing income. The SWP facility actually serves as a source of monthly cashflow like a regular pension. If one can maintain a rate of withdrawal that is slightly lower than the growth of the capital, the capital base continues to grow despite the withdrawals.
Is BNP Paribas a good mutual fund house
Baroda BNP Paribas Asset Management India manages 323 schemes including: 16 equity schemes, 14 debt schemes, 6 hybrid schemes, and 2 money market schemes. It’s AUM is Rs 37,057.74 crores. The AMC as a JV between Bank of Baroda and BNP Paribas Asset Management, the asset management arm of BNP Paribas.
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