Share Market

Like picking up the right kind of fund, we should also know the right time to sell them off! Here, we would learn when we should sell our Mutual Funds.

Fund doesn’t meet its objective

When we buy a particular fund, the objective says a lot about how the fund plans to invest. If the objective is not being met, it is one of the depart points worth considering.

Poor performance

If a fund is not performing well in the long run, we must sell it off. Here, we are talking about relative performance and not absolute performance. A short-term observation cannot tell us about the actual performance of the fund. It could lead to committing hara-kiri.

A change in investor’s life stage

Our needs differ with our changing life stages. What we would like to have as a return, when we are young may not be similar to what we would need as we would age. Similarly, a young investor may be quite ready to take up risks than an elderly person, who is probably retired! So a change in life stages would be one such reason to consider switching into a fund that matches with one’s needs.

A major change in any fundamental attribute of the fund

Changes like a change in Asset Management Company or in investment style of fund or change of structure say from closed-end to open-end etc. are likely to affect the performance of a fund. In that case, we should make up our mind to make an exit. . Even SEBI has provided for an exit route being made available to the investors.

The Fund’s Expense Ratio Rises

If the Mutual Fund’s Expense Ratio rises significantly, we might be under loss. It would be the right time to sell the fund.

Change in management

If your fund manager has changed and you are not quite satisfied with the new management, you could consider in selling off the fund. However, if it is an actively managed fund, then has to keep the eyes on the new manager.

Good earning/returns

If you are happy with your returns, in short term, do not wait to sell the fund. It is not advisable to spend more time and wait for more and more returns, once you have gained enough.