HOW TO SWITCH FROM MUTUAL FUNDS?
Selecting a mutual fund scheme to invest in is a very subjective question, and this decision involves a lot of factors like investment tenure, goal and risk appetite among others. But if we go back some years, it was quite common that advisors or agents used to invest your money in the funds of their choice. Even today, someone might feel that the funds they invested in do not match their investment styles anymore and might want to switch.
The reason behind this switch can be anything ranging from not being comfortable with the fund due to high risk and volatility to the fund offering fewer returns when compared to the industry. Now the question arises, whether investors can switch their funds from one mutual fund to another? Can they have the flexibility of directly transferring the units and amount from one scheme to a better-suited scheme for them?
YES, it is absolutely possible. Investors must note that the scheme transfer can be done within an AMC only and not between AMCs. Also, if an investor is willing to switch from an advisor of a Mutual Fund Distribution Platform, he can comfortably do that too!
In this article, we are going to discuss the ways by which an investor can initiate this! And do read till the end for a super awesome surprise.
What is a Mutual Fund Switch?
“Switch” in Mutual Funds is a process wherein investors can easily switch their investments from one mutual fund scheme to another. In the process of switching mutual funds, investors can get the privilege of-
- Moving the invested money from one fund to another but within the same AMC and
- Switching from an existing mutual fund advisor to another
In most cases, investors opt for switching only when they find their fund has not been not working satisfactorily or when they have found a better scheme than their current one. So, in such scenarios, investors can move their investment partially or fully as per the necessity.
However, as per the income tax laws, every switch is treated as a redemption from one scheme and investment in another scheme. Therefore, the capital gains booked from the redeemed scheme are subject to capital gain taxes as per the holding period & type of fund.
What is Switch to Another Mutual Fund Advisor?
There could be various reasons you might want to change your mutual fund advisor. For instance, maybe you are not satisfied with his service or, let's say, you are not in touch with your advisor anymore, which makes it difficult to track your investments.
Talking about the process of the switch, there are a number of options available to you. One option is that you create an investor account with any mutual fund distributor that you would like to connect with, and then you can request a switch on their platform by filling in or providing the necessary information. The switch will be facilitated in a way that you will need to select a different scheme within the same AMC to which the investment or unit balance will be transferred from the existing mutual fund scheme.
After you open the account with any distribution platform, you need to share the folio no. of your existing schemes, the name of your existing mutual fund scheme and then specify the target funds to which your investments will be transferred. When the switch is processed, your investments will now be with the new advisor.
Another option to switch to a new mutual fund advisor is by going to the AMC’s official website. You will have to log in to your account & if you don’t have one, then you can register by filling in the required details. Once the account is opened, you will be able to see all your holdings with that particular fund house. Thereafter, you need to find the transaction section and select the switch option while specifying the source & target schemes for the switch. While doing that, you need to enter the ARN code of the new advisor. This way, the transaction & investment will be mapped to the new advisor.
What are the methods of Switching Mutual Funds?
You can switch through any of the below-listed methods once you have made your decision to switch your units:
Through Your Mutual Fund Distributor’s Platform: You can switch your mutual fund investments by taking help from your Mutual Fund Distributor or their Platform. They will place your request in their back-end BSE server. For that, you will need to share the investment details like the Folio number, Source funds(From which you want to transfer your MF units), Target funds(To which you want to transfer your MF units), and the amount you want to transfer, etc. Once you have shared investment details, you will get their assistance in the switching of mutual funds. The amount will be transferred to the selected target mutual fund scheme within a few working days.
Through AMC’s Official Website: For switching your mutual fund investments, you can also do it by going to the AMCs’ Official Website. In that case, you will need to log in to that AMC or Mutual Fund’s Account where your money was invested. Suppose you invested in a scheme of ICICI Prudential Mutual Fund; in that case, you will have to log in to ICICI Pru MF’s official website only. You will be required to register yourself if not registered. Once the account is opened, you will be able to see all your holdings in that particular AMC. Then for the switch, simply select the source scheme, target scheme & the amount you want to transfer. After the transaction is placed, units will be transferred to the target scheme.
Through your Physical Request (CAMS, KARVY): Another method of switching mutual funds is a physical request. In an offline method, investors will be required to visit the specific AMC or RTA such as CAMS & KFintech (Karvy). Once you reach there, you will get the physical form to begin the switching process. In the form, you will be asked to fill up the details like Folio number, source scheme name, target scheme name, the amount or unit balance you want to switch, etc. After submitting the form, the switch will be processed, and the investment amount will be switched from the old scheme to the selected new scheme.
So these are the ways by which you can switch your mutual funds. But what if I told you that there is a dedicated team that is there to support you. You just have to drop a simple Whatsapp message, and they will help you to get your mutual funds switched and take all the stress and hassle.
No need to worry because we at ZFunds have taken this initiative to come forward and help investors. You can reach out to us by dropping a whatsapp at 7217746224. And our experts and advisors will be there to give you one on one guidance and help you with each and every step.
Happy Investing!
