3 indicators for when you should exit mutual funds

Read full story
Investing in mutual funds is becoming a rage among investors as they offer better risk-adjusted returns and come with many benefits like healthy investing habits, price averaging, etc.

Investments in mutual funds through SIPs have also become popular as an investor can pool in a certain amount periodically in a mutual fund for a specific period.

While looking for a mutual fund, investors should understand several schemes available in the market and for how long you wish to invest in that mutual fund.

However, there can be times when your mutual funds are not helping you achieve your financial goals.

One can also limit the loss in mutual funds. "Average your loss by investing in MF through SIP. Never churn your investments frequently. It causes more harm than good," said Ajit Narasimhan, category head-savings and investments, BankBazaar.com.

Other than this, there are other reasons and indicators when you should exit mutual funds. Here are top 3 reasons why a person should exit mutual fund.


View As: One Page Slides

1. To meet liquidity requirements:

1. To meet liquidity requirements:

Emergencies never come announced. If you have an urgent unplanned expense coming up, you may have to liquidate your investment to meet emergencies. “To avoid such a situation, build up an emergency corpus in parallel. Also, research and invest in a sound health cover so that you do not dip into your savings to meet healthcare requirements,” said Narasimhan.

2. To meet milestones/goals set:

2. To meet milestones/goals set:

Mutual fund investments generally tend to be goal-based – be it for buying a car or home, education, retirement, etc. So, once you reach the goal you’ve set, liquidate the holding in earmarked funds for that specific goal.

3. ​When you sense a shift in the AMC’s focus:

3. ​When you sense a shift in the AMC’s focus:

The expertise, knowledge, experience and past performance of the fund manager, research team or investment committee are important factors to consider while selecting an Asset Management Company (AMC). “When there is a fundamental shift in an AMC’s focus – for example, frequent churn in key personnel of an AMC – it is bound to impact MF investors. So, any such changes may warrant a relook at the investment,” he said

Add Comment()

Comments ()

Sort By:
Be the first one to comment.
We have sent you a verification email. This comment will be published once verification is done.