A Systematic Withdrawal Plan (SWP) is a type of investment strategy in which a set amount of money is regularly drawn from a portfolio of investments, such as a mutual fund, to provide a regular income stream. SWP is Ideal for retirees seeking a regular source of income without having to redeem their investments.
In this blog, we have listed down the best SWP mutual fund schemes to invest in India. Read on!
Listed below are the 15 best SWP plan in India 2023 you can consider investing in:
|Serial No.||Mutual Fund||Features|
|1.||Mirae Asset Tax Saver Fund – Direct Plan – Growth||NAV: ₹33.55|
Expense Ratio: 0.58%
|2.||Canara Robeco Equity Tax Saver Fund – Direct Plan – Growth||NAV: ₹123.07|
Expense Ratio: 0.64%
AUM: ₹4685.85 Crore
|3.||Canara Robeco Bluechip Equity Fund – Direct Plan – Growth||NAV: ₹45.78|
Expense Ratio: 0.48%
AUM: ₹8672.96 Crore
|4.||Axis Bluechip Fund – Direct Plan – Growth||NAV: ₹46.96|
Expense Ratio: 0.59%
AUM: ₹33584.04 Crore
|5.||Edelweiss Balanced Advantage Fund – Direct Plan – Growth||NAV: ₹40.04|
Expense Ratio: 0.63%
AUM: ₹33049.77 Crore
|6.||UTI Hybrid Equity Fund – Direct Plan – Growth||NAV: ₹273.779|
AUM: ₹4286.95 Crore
|7.||PGIM India Ultra Short Term Fund – Direct Plan – Growth||NAV: ₹30.28|
Expense Ratio: 0.27%
AUM: ₹405.21 Crore
|8.||ICICI Prudential Ultra Short Term Fund – Direct Plan – Growth||NAV: ₹25.31|
Expense Ratio: 0.39%
AUM: ₹12447.39 Crore
|9.||Quant Liquid Plan – Direct Plan – Growth||NAV: ₹36.27|
Expense Ratio: 0.29%
AUM: ₹1561.92 Crore
|10.||Franklin India Liquid Fund – Super Institutional – Direct Plan – Growth||NAV: ₹3383.90|
Expense Ratio: 0.13%
AUM: ₹1511.18 Crore
|11.||HDFC Hybrid Equity Fund – Direct Plan – Growth||NAV: ₹90.55|
Expense Ratio: 1.09%
AUM: ₹18729.59 Crore
|12.||Nippon India Equity Hybrid Fund – Direct Growth||NAV: ₹76.81|
Expense Ratio: 1.32%
AUM: ₹2764.57 Crore
|13.||SBI Equity Hybrid Fund – Direct Plan – Growth||NAV: ₹216.43|
Expense Ratio: 0.79%
AUM: ₹5442.98 Crore
|14.||Tata Hybrid Equity Fund – Direct Plan – Growth||NAV: ₹346.25|
Expense Ratio: 1.05%
AUM: ₹3166.06 Crore
|15.||Aditya Birla Sun Life Equity Hybrid 95 Fund – Direct Plan – Growth||NAV: ₹1125.34|
Expense Ratio: 1.01%
AUM: ₹7046.35 Crore
The details of the top SWP mutual funds 2023 are as follows:
Considered as one of the best systematic withdrawal plans, this equity-linked savings scheme was launched on December 28, 2015, and since then, has delivered 18.76% in average annualised returns. It invests 33.07% of its assets in the financial sector, 10.45% in energy and 9.20% in technology. It also has exposure in automobile, healthcare and other sectors. For more details, check below:
Also considered to provide best SWP returns, the Canara Robeco Equity Tax Saver Fund is an equity-linked savings scheme that invests 33.44% in the financial sector, 9.47% in technologies, 7.09% in automobiles and 5.98% in healthcare stocks. This scheme also invests in energy and other sectors. Since its introduction on January 2, 2013, this mutual fund has delivered 15.01% average annualised returns. Check below for more details:
This large cap mutual fund invests 36.55% in the financial sector, 10.92% in technology, 8.27% in energy, 8.06% in consumer staples, 5.93% in automobiles and 30.27% in other sectors. The minimum amount for additional investment and SIP investment is ₹1,000 each. Since its introduction on January 2, 2013, Canara Robeco Bluechip Equity Fund has delivered 14.16% average annualised returns. Given below are more details:
This large cap mutual fund invests 39.57% in the financial sector, followed by 12.09% in technology, 7.99% in services, 4.82% in automobiles, 4.39% in energy and 31.14% in others. Axis Bluechip fund was introduced on January 2, 2013, and since then, it has delivered an average annualised return of 14.29%. Investors looking for capital appreciation in 3-4 years will prefer these funds. Given below are more details:
This balanced advantage fund invests in equities and debt securities as well as in arbitrage opportunities to generate steady returns over time. It invests 24.42% in the financial sector and has exposure in energy, technology, consumer staples, automobiles and other sectors. Since its inception on January 22, 2013, the Edelweiss Balanced Advantage Fund has delivered 12.09% average annualised returns. More details are as follows:
This is an aggressive hybrid fund with 25.31% exposure in the financial sector, 8.67% in technology, 7.65% in automobiles, 6.66% in construction, 5.33% in healthcare and 46.38% in other sectors. The UTI Hybrid Equity fund was introduced on January 2, 2013, and since then, it has generated average annualised returns of 11.96%. Check below for more details:
This is an ultra short duration fund which invests 15.51% in government securities and 80.78% in low-risk securities. This debt fund aims to achieve high liquidity and generate safe returns from short-term debt and money market instruments. The PGIM India Ultra Short Term Fund was introduced on January 2, 2013, and since then, it has delivered 8.10% average annualised returns. Take a look at the following details:
This is an ultra short duration fund which was launched on January 8, 2013. It invests 80.03% in low-risk securities and 5.44% in government securities. Risk-averse investors looking for short-term alternatives to bank deposits will find this fund suitable. Since its inception, it has delivered an average annualised return of 8.10%. More details are as follows:
Quant Liquid Plan invests 66.24% in low-risk securities and 1.69% in government securities. This scheme was officially launched on January 5, 2013, and since then, it has delivered a 7.24% average annualised return. The minimum amount for both additional investment and SIP investment is ₹1,000. Check its details below:
The Franklin India Liquid Fund invests 78.74% in low-risk securities, 8.87% in government securities and 12.39% in cash and equivalent assets. The minimum amount required for additional and SIP investment is ₹1,000 and ₹500 each. This liquid fund aims to provide current income to investors with a very short investment horizon by investing 100% in debt securities. More details have been provided below:
This aggressive hybrid scheme invests 28.87% in the financial sector, 8.74% in energy, 6.96% in capital goods, 5.93% in technology, 5.49% in consumer staples and 44.01% in other securities. HDFC Hybrid Equity Fund was launched on January 1, 2013, and since inception, it has delivered 11.91% average annualised returns. Given below are more details:
This hybrid scheme was launched on January 2, 2013, and it has generated 11.37% in average annualised returns since inception. Nippon India Equity Hybrid Fund invests 24.79% in the financial sector, 9.44% in technology, 6.79% in energy, 5.44% in consumer staples, 5.28% in healthcare and 48.26% in other sectors. The minimum amount required for SIP investment is ₹100. Check the following data to get a more detailed overview:
The SBI Equity Hybrid Fund invests 26.25% in the financial sector, 9.13% in healthcare, 5.54% in services, 4.97% in automobiles, 4.57% in communication and 49.55% in other sectors. This mutual fund was introduced in the financial market on January 2, 2013, and since its introduction, it has been able to deliver average annualised returns of 14.32%. More details are as follows:
The Tata Hybrid Equity Fund invests 27.59% in the financial sector, 9.00% in technology, 8.39% in consumer staples, 7.56% in energy, 5.78% in services and 41.68% in other sectors. This aggressive hybrid scheme was officially launched on January 2, 2013, and since its launch, it has successfully generated average annualised returns of 13.16%. More details are as follows:
The official launch date of this mutual fund was January 2, 2013. The scheme invests 22.30% in the financial sector, 9.27% in technology, 6.68% in healthcare, 6.19% in automobiles, 6.18% in capital goods and 49.38% in other sectors. Since its inception, this aggressive hybrid scheme has delivered 12.24% average annualised returns. Provided below are more details:
Listed below are some of the best SWP mutual funds for senior citizens:
|ICICI Prudential Balanced Advantage Fund – Direct Plan – Growth||NAV: ₹52.68|
Expense Ratio: 1.57%
|HDFC Short Term Debt Fund – Direct Plan – Growth||NAV: ₹27.50|
Expense Ratio: 0.29%
AUM: ₹11028.58 Crore
|ICICI Prudential Ultra Short Term Fund – Direct Plan – Growth||NAV: ₹23.69|
Expense Ratio: 0.84%
|Kotak Debt Hybrid Fund – Direct Plan – Growth||NAV: ₹44.73|
Expense Ratio: 1.81%
|SBI Conservative Hybrid Fund – Direct Plan – Growth||NAV: ₹56.22|
Expense Ratio: 1.11%
Systematic withdrawal plans (SWPs) work by regularly withdrawing a certain amount of money from a portfolio of investments, such as mutual funds, to provide a regular income stream. Here’s how it typically works:
The investor decides how much they want to withdraw on a regular basis, such as monthly, quarterly, or annually.
The investor opens an SWP account with a mutual fund company and specifies the amount of the withdrawal and the frequency of the withdrawals.
The SWP account is invested in a portfolio of mutual funds, stocks, bonds, or other investments.
On the specified date, the specified amount is automatically withdrawn from the portfolio and deposited into the investor’s bank account.
The withdrawal amount can be adjusted over time, depending on market conditions and the investor’s needs.
Ms. Aggarwal has invested a lump sum amount of Rs. 2 lakh in a fund with an NAV of Rs. 20. Thus, 10,000 fund units are allotted. She starts a monthly SWP of Rs. 5000 after a year from the investment date.
In the first month, the scheme has an NAV of Rs. 40. To generate Rs. 5000, the SWP will redeem 125 fund units (Rs. 5000/40), and 9875 units are left. For the second month, assuming the NAV is Rs. 50, the SWP redeems 197.5 fund units. Now, the balance left is 9677.5 fund units.
Investors can choose the amount, frequency and dates for redeeming fund units automatically. They can also stop the investment or add further investment to suit their needs.
By not redeeming the principal amount invested, you can lower your taxable income. Thus, SWPs are tax-efficient redemption plans. Moreover, no TDS is applicable on the SWP amount.
You can use an SWP as secondary income in times of need. If the rate of return on investment is high, you can get regular income without reducing the initial investments.
You can use SWP to create a customised cash flow for reaching your financial goals. The money can supplement your main income in times of financial stress or market fluctuations.
Here are some situations where one may invest in SWP mutual funds:
Follow these steps to invest in mutual funds via a Systematic Withdrawal Plan:
Choose a mutual fund based on your investment goals and risk profile.
Visit the AMC’s (Asset Management Company) official website and register. Navigate to the ‘mutual funds’ section and choose your preferred scheme.
Decide on your investment amount.
Evaluate your risk profile and financial objectives, once again before choosing the SWP option. For instance, retired individuals with a low-risk profile can consider investing in debt funds if they are not willing to get exposed to the market volatility associated with equity investments.
Decide on the interval of the SWP, for instance, choose whether you will withdraw the specified amount monthly, quarterly, half-yearly or annually.
Specify the amount and withdrawal rate which you will withdraw as a part of the Systematic Withdrawal Plan.
Fill up your KYC details, such as your PAN and bank account details. Check before submitting the form.
To begin investing in the scheme, transfer the investment amount.
While choosing an amount for SWP, you can choose the withdrawal rate that will cover all your expenses. Another recommendation would be to check your cash flow requirement regularly for any changes caused by inflation or lifestyle changes.
The SWP is the choice of date, periodicity and amount of withdrawal from a mutual fund. You will want to do adequate research to choose the best mutual funds for SWP as the returns will depend on it. Remember to check if it suits your financial goals, risk profile, investment horizon, etc.
Market fluctuations directly impact mutual fund investments. When an individual is approaching a financial goal, investors may want to consider the market situation. This is to make sure that the fund returns do not erode if not withdrawn in time.
The best funds for SWP let you prepare an adequate retirement corpus. You will want to invest in a mutual fund suiting your risk profile. If well-planned, SWP is ideal for supplementing your income after retirement.
With an SWP, you can time your withdrawals as per your financial requirements. If your financial goals require funds in a phased manner, you make sure that you will get funds at the right time.
Every withdrawal through the SWP will be subject to capital gains tax. For equity funds, STCG (short term capital gains) tax will be applicable at a 15% rate for less than a year’s holding period. For a longer holding period, LTCG (long-term capital gains) tax is applicable at a 10% rate above Rs. 1 lakh tax exemption limit.
For debt funds, STCG will be applicable at income tax rates of individual investors for a holding period of less than 36 months. If the holding period is longer, LTCG is taxed at 20% with indexation benefits.
When you redeem your SWP mutual fund investments, the capital gains will be subject to taxation depending on two factors– the type of underlying securities and the holding period of the investments.
Let us look at a few important points:
If you wish to earn regular income from your mutual fund investments, you can consider investing in one of the best SWP mutual funds in India. A Systematic Withdrawal Plan helps you to effectively create a cash flow based on your financial requirements. To make an informed decision, go through the details of some of the best SWP plans 2023 that we have provided in the blog. But, before choosing a scheme, do not forget to assess your risk profile and investment objectives.
But if you’re just starting out on your investment journey and plan to invest in low-cost equity schemes, start investing with Navi Mutual Fund. With Navi, you can get access to a host of low-cost mutual funds. What’s even better? You can start investing with as low as ₹10!
Existing investors can contact their financial advisor or mutual fund distributor to apply for an SWP. They will need to file an SWP form and submit it to the AMC (Asset Management Company) or registrar for processing. New investors can opt for an SWP when submitting the application form for a mutual fund.
You will need to be mindful of where you are investing and how much you want to withdraw to set up an SWP. Investors can opt for an SWP that is lower than the scheme’s average returns to avoid touching the capital.
Yes, many investors overlook the risks of not redeeming the entire investment for the possibility of generating extra returns. For example, if you have an equity investment and you redeem in a staggered manner via SWPs, the remaining fund is subject to market risks.
If your withdrawals are more than the investments earned, your retirement corpus may not last for very long. Equity markets can be volatile, and a market downturn can deplete your retirement corpus early. This is not much of a problem if you have a considerable investment amount.
Unlike an SWP, which redeems fund units at fixed intervals, a Systematic Transfer Plan (STP) involves transferring money to another mutual fund. The aim of an STP is to rebalance your investment portfolio by transferring funds to a different asset class.
A Systematic Withdrawal Plan (SWP) is a mutual fund investment plan which enables people to withdraw a fixed amount at predetermined intervals. A major benefit offered by SWP is that it allows people to create a cash flow based on their financial requirements.
Some of the best SWP mutual funds have been provided below:
1. Mirae Asset Tax Saver Fund
2. Canara Robeco Equity Tax Saver Fund
3. Canara Robeco Bluechip Equity Equity Fund
4. Axis Bluechip Fund
5. Edelweiss Balanced Advantage Fund
The market regulator Securities and Exchange Board of India (SEBI) is responsible for framing guidelines for mutual funds in India and so it is quite safe to invest in SWP mutual funds. Financial advisors recommend investing in schemes that offer steady returns at low risk. You can consider investing in these schemes if you wish to create a source of pension or secondary income.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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