Systematic Withdrawal Plan (SWP) is one of the smartest ways for investors to generate steady income while keeping their capital invested. Many investors, especially retirees, prefer SWP over fixed deposits and dividends as it provides tax efficiency, flexibility, and inflation-adjusted withdrawals. If chosen wisely, SWP can help investors maintain cash flow without exhausting their wealth. This article will cover what SWP is, efficient ways to use it, and the 5 best SWP mutual funds to consider in 2025.
In case you are planning to create wealth, you can check our earlier article 13 Wealth Builder Mutual Funds with 5 Star Rating from Value Research to invest in 2025.
What is SWP in Mutual Funds?
A Systematic Withdrawal Plan (SWP) is a facility where investors can withdraw a fixed amount at regular intervals (monthly, quarterly, annually) from their mutual fund investments. The remaining corpus stays invested and continues to grow.
Efficient Ways to Use SWP
- Retirement Planning: Helps retirees generate monthly income while capital continues to earn.
- Tax-Efficient Withdrawals: SWP redemptions are more tax-friendly than FD interest.
- Wealth Preservation: Only a part is withdrawn, balance stays invested.
- Inflation Adjustment: Withdrawal amount can be increased periodically to beat inflation.
There are Several Ways to Maximise Returns from SWP Mutual Funds.
Which category of mutual funds are best for SWP to invest in 2025?
Balanced advantage funds, hybrid funds, equity savings funds and largecap funds could be better for SWP. Adding a flavor of large-midcap fund can provide slightly higher returns while it comes with risk. There is no hard / fast rule in picking up the funds. As long as it aligns your risk appetite and tenure of investment, you can invest in any top performing funds from above categories.
Data source is from moneycontrol and valueresearch as on 8-Sep-2025.
Top 5 SWP Mutual Funds for 2025
#1 – ICICI Prudential Balanced Advantage Fund
- Investment Objective: Dynamic allocation between equity and debt to deliver stable returns across market cycles.
- Annualised Returns:
- 1 Year: 6.3%
- 3 Years: 13.6%
- 5 Years: 15.1%
- 10 Years: 12.4%
- Why to Consider: Less volatile, adaptive strategy, ideal for SWP withdrawals.
- Who Can Invest: Moderate investors seeking stable monthly cash flow.
- Risk Factors: Moderate market risk due to allocation changes.
#2 – HDFC Hybrid Equity Fund
- Investment Objective: Invests in equity and debt to generate long-term capital appreciation with stability.
- Annualised Returns:
- 1 Year: 1.0%
- 3 Years: 12.8%
- 5 Years: 18.0%
- 10 Years: 12.1%
- Why to Consider: Consistent performer with balanced risk exposure.
- Who Can Invest: Conservative to moderate investors, especially retirees.
- Risk Factors: Market volatility may impact short-term returns.
#3 – Motilal Oswal Large & Midcap Fund
- Investment Objective: Blend of large-cap stability and mid-cap growth.
- Annualised Returns:
- 1 Year: 3.8%
- 3 Years: 28.3%
- 5 Years: 29.6%
- 10 Years: 24.5%
- Why to Consider: Growth-oriented with diversification.
- Who Can Invest: Moderate risk-takers looking for higher SWP withdrawals.
- Risk Factors: Mid-cap allocation adds volatility.
We analysed this fund earlier in 13 Best Mutual Funds Rated 5-Star by Value Research (30%+ CAGR in 5 Years).
#4 – Bandhan Large & Midcap Fund
- Investment Objective: To deliver capital appreciation by investing in large and mid-sized companies.
- Annualised Returns:
- 1 Year: -1.8%
- 3 Years: 24.7%
- 5 Years: 26.9%
- 10 Years: 18.0%
- Why to Consider: Steady growth with diversification.
- Who Can Invest: Long-term investors aiming for sustainable SWP.
- Risk Factors: Sensitive to equity market downturns.
#5 – Nippon India Large Cap Fund
- Investment Objective: To achieve long-term growth by investing predominantly in large-cap companies.
- Annualised Returns:
- 1 Year: 2.2%
- 3 Years: 19.9%
- 5 Years: 25.0%
- 10 Years: 15.9%
- Why to Consider: Large-cap focus ensures stability, good for predictable SWP withdrawals.
- Who Can Invest: Conservative to moderate investors preferring steady growth.
- Risk Factors: Pure equity exposure; market downturns can affect performance.
We listed this fund as part of 5 Best Blue-Chip Mutual Funds to invest in 2025.
Final Thoughts
SWP can be a game-changer for investors who want consistent income without disturbing their investment corpus. While hybrid and balanced funds are safer choices, equity-oriented SWP funds can deliver better inflation-adjusted returns over the long run. The above-listed funds are some of the best mutual funds for SWP in 2025 and can suit varying investor needs.
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