By Mutual Fund: Assessing the Pros and Cons of Switching Between Schemes or Fund Houses Many individuals invest in mutual fund schemes or opt to switch to a different scheme, often prompted by the current scheme not delivering the expected returns or to minimize losses. Switching mutual funds involves transferring investments from one scheme to another within the same mutual fund house. It allows for the movement of funds between equity and debt schemes within the same fund house. If one intends to transfer investments between schemes of different fund houses, the initial step is redeeming from the existing scheme, followed by investing in the desired scheme of another mutual fund house.
Suppose your mutual fund investments are currently in Scheme A, and you wish to switch to Scheme B from Fund House B. In this scenario, you would need to redeem units from Scheme A, involving the sale of units, and the proceeds from the redemption would be credited to your bank account. Subsequently, you can invest in mutual fund Scheme B. It’s important to note that capital gains tax is applicable on the redemption of mutual fund units. To gain insights into the advantages and disadvantages of switching from one mutual fund to another, you can explore further in this video.
