Switching mutual funds made easy: A step-by-step guide to transfer your investments seamlessly

Change is the only constant in this world. Therefore, good investors must always be prepared to modify their investment approaches as per the ever-evolving market landscape. For example, suppose you start your investment journey with a particular mutual fund, but over time you realise that the returns are not matching with your objectives. Thus, in such a scenario, you may find it imperative to re-adapt to the new situation and switch to a different mutual fund scheme that is more in line with your goals and risk appetite. Conversely, as your life needs and responsibilities evolve, you may want to switch to another plan that gels with your new requirements.
In this article, we will provide a step-by-step guide on how to switch mutual fund schemes smoothly, ensuring a seamless transition for your investments.

• Table of contents

1. What is the switching in mutual funds?
2. How to switch from one mutual fund scheme to another?
3. Online method – through the AMC’s website
4. Factors to consider before switching
5. FAQs

What is the switching in mutual funds?

Switching mutual funds refers to the process of transferring your investments from one mutual fund scheme to another within the same Asset Management Company (AMC). It allows investors to reallocate their funds without having to redeem and reinvest them. This flexibility gives investors the opportunity to adapt their portfolios to changing market conditions, financial goals, or personal preferences.

How to switch from one mutual fund scheme to another?

Before initiating the switch, carefully review the exit load structure of your current fund. Exit loads are charges levied when exiting a mutual fund within a specified period. Additionally, be aware of any tax implications associated with redeeming your investments. Understanding these costs will enable you to make an informed decision.

Online method – through the AMC’s website

Before carrying out any online mutual fund transactions, make sure you are registered with your AMC.

• Step 1: Verify your mutual fund’s status by signing into your account.
• Step 2: Navigate to the "Transaction" page where you can perform various financial activities such as purchasing, exchanging, or redeeming money.
• Step 3: Select the "Switch" option, then choose the scheme, its plan, and the option you wish to exit from. Similarly, select the scheme, plan, and the option you would like to join. If you are transitioning from a regular plan to a direct plan, ensure that the new plan you select includes the term "Direct" in its name. (Your AMC will be notified about the modification request.)
• Step 4: If you submit your request before 3 pm, the amount will be transferred on the same day. The allocation of units will take T+1 day for liquid to debt/equity and debt to liquid/equity, T+2 days for equity to debt/liquid.
• Step 5: To check the status update of your switch request, log in to your account after 4 days.

Offline method

An investor is required to follow the same steps as above – in person – to switch plans offline.

• Step 1: Visit your AMC office.
• Step 2: Fill in the transaction-switch form with all the necessary information (name of your fund, folio number, target scheme you wish to convert to, etc.)
• Step 3: Submit the form.
• Step 4: After processing your request, the AMC will contact your registered email address with updates.

Factors to consider before switching

• Performance: Analyze the performance of your current mutual fund scheme against its benchmark and peers. If it consistently underperforms or fails to meet your expectations, it may be a signal to consider a switch.
• Investment objective: Evaluate whether the investment objective of your current fund aligns with your evolving financial goals. Switching may be warranted if your objectives have changed or the fund's strategy no longer matches your requirements.
• Risk and volatility: Assess your risk tolerance and consider the level of volatility associated with your current fund. If the risk profile no longer suits your comfort level or the fund's volatility is too high, exploring other options may be prudent.
• Fund manager consistency: Evaluate the track record and consistency of the fund manager managing your current scheme.

Conclusion:
Switching mutual funds provides investors with the flexibility to adapt their investment portfolios to changing market conditions and personal circumstances. By carefully assessing your investment goals, researching potential alternatives, and seeking expert advice, you can navigate the process seamlessly. Remember to consider factors such as investment objectives, risk, and fund manager experience before making the switch. This way, you can take control of their financial journey and ensure their investments grow in the long term.

FAQs:

Can I switch between different types of mutual funds?

Yes, it is possible to switch between different types of mutual funds such as equity and debt.

What are the different factors to be considered before switching in mutual funds?

You must consider the investment objectives, risk appetite, and investment horizon associated with each type of fund to ensure the switch aligns with your financial goals.

How long does it take for a mutual fund switch to be processed?

While the processing time for a mutual fund switch may vary among different fund houses, it usually takes T+1 to T+2 days for the switch to be processed, during which the NAV is calculated.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.