STP, short for Systematic Transfer Plan, is a sophisticated strategy within mutual fund investing. It involves the disciplined transfer of a predetermined sum from one mutual fund scheme to another at consistent intervals.

This approach is often deployed to mitigate risk or capitalize on varied investment prospects within the same fund house or across different asset categories. For instance, an investor might initiate a lump sum investment in a liquid or debt fund, thereafter orchestrating periodic transfers to an equity fund to potentially capitalize on growth opportunities while prudently managing risk through incremental transfers.

In essence, STP furnishes investors with a structured mechanism to transition funds from one mutual fund to another, aligning with their investment objectives and risk appetite over time.