Financial Education
Question #173
What is Power STP?
Power STP is an intelligent valuation-driven strategy that helps you invest lumpsum amounts in equities anytime without worrying about current market valuations. The strategy instead of investing all your money in equities at one go takes an opportunistic approach. It collects your money in a safe debt fund and gradually moves it into equities over a period of time. The pace of deployment into equities is automatically varied based on the market valuations - deploys larger amounts of money into equities when valuations are low and lower amounts of money when valuations are high. Overall idea is to help you enter equities at reasonable valuations irrespective of the starting valuations by gradually deploying the money over a period of time. During high valuation phases, historically it has taken around 1-2 years to deploy the money into equities. This strategy reduces the risk of poor long-term outcomes led by high starting valuations and provides a relatively more consistent return experience over the long term.
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