Kotak Mutual Fund has launched a new facility in SIP, STP and SWP, where investment and withdrawals can be triggered based on market valuation -- Cheap, Neutral and Expensive.

The new facility will be available for all open-ended equity schemes, Equity Index Funds and Kotak Equity Hybrid Fund.

When valuations are expensive, the default SIP instalment will be half (0.5 times) of the base SIP amount, and when valuations are cheap, the instalment would be (2 times) the base SIP amount.

The facility also allows investors to choose the minimum and maximum SIP amount.

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Investors can also opt for this option through the Systematic Transfer Plan (STP) route.

Valuations are decided based on the net equity allocation of the Kotak Balanced Advantage Fund, which uses a combination of the adjusted trailing Price-to-Earnings ratio (P/E ratio), and trend and sentiment data.

It is also available for redemptions through the Systematic Withdrawal Plan (SWP). The Smart SWP enables the investor to redeem a higher amount when equity valuations are expensive and a lower amount when valuations are cheaper.

Nilesh Shah, Managing Director, Kotak Mutual Fund, said the facility will help investors looking for a valuation-based equity investment approach.

Smart SIP is a very simple yet powerful tool for systematic investments which is easy to understand and even easier to invest, he added.