Can you advise on Switching MF funds, instead of Redemption.
How exactly calculate one’s benefit when opting for switch option, as I saw that there is something called “expense ratio”.
Could you elaborate on that?
Do you feel switch or redemption differ for your existing old fund? For your old fund, when you redeem or switch, it is exit and exit rules applies to that fund. Now, the difference between switch and redeem is that, in case of switch, you withdraw from one fund and investing in another fund. However, in case of redeem, freshly you are not investing.
First understand for what purpose and with what reason you want to exercise the option.
Well, I have invested in just too many MF’s (some 86 odd, across BSL, Axis, ICICI, HDFC, Farnklin, etc) and want to narrow down to a few – as I think that is how one should invest.
but still not have all eggs in one basket.
So decided to switch, from fund-X, fund-Y and fund-Z of HDFC into one-single-good-fund of HDFC – but if exit loads still apply; there is no point.
Also I was told, park money in Liquid funds instead of savings bank, and then invest that into MF when required and so this question.
Exit load depends on fund type and tenure of your holding. So don’t generelize that exit load be there for all switch or redemption. Second thing, whether your investment is Rs.100 or Rs.1 Cr a month, 2-3 funds are enough to manage your whole equity portfolio. Also, if your goals are long term, then investin lump sum is always advisable rather than a strategy called parking cash in liquid fund and then switching to equity.