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Switching Your Mutual Fund Scheme: Here Is What you Should Know


Indian stock markets have come crashing down and many investors want to switch from debt mutual funds to equity mutual funds to make sure they can make the best of low stock prices.


Switching Your Mutual Fund Scheme: Here Is What you Should Know
But, there are a few things that you should remember when you switch from one mutual fund scheme to another.

How to make the switch in mutual funds?

Normally, there is a transaction slip that most mutual funds have. You can fill the transaction slip and then make the change accordingly.

You can also change the mutual fund scheme online, provided you have your PIN and password. The mutual fund will help you with regards to the same.

Remember, that you should check the net asset value of the scheme and fill in the scheme name properly. Also, remember to opt for either dividend distribution or dividend reinvestment.

In any case, even if you opt for dividend distribution it is tax free in the hands of investors.

There are charges applicable when you switch mutual fund schemes

When you move from one scheme to the other what it means is that you are redeeming from one scheme and than moving to another.

This would mean that there would be an entry and exit load that would be applicable. It is therefore important to check the entry and exit load of the particular scheme before investing.

Should you really make the changes?

It all depends on the individual, if he should make the necessary changes. It would depend a lot of expert advise that you should have access to.

For example, the Sensex has come crashing from 30,000 points in March 2015, to the current levels of 23,000 points. A good cut of 23 per cent from last years highest levels. So, if you have invested in debt, you might want to seek expert advise, whether now would be the good time to make the switch from debt to equity as the stock markets has crashed.



Remember to the check the most important thing that is the exit and entry load. Also, frequent switching of mutual fund schemes, would only result in you frequently paying the entry and exit load. Stay in equity schemes for a longer duration to get maximum benefits.

Read more about: sensex
Story first published: Monday, February 15, 2016, 10:30 [IST]
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