Could you clarify why you suggest investing in Kotak Flexi Debt for the long-term when your ‘Mutual Fund Guide 2009’ says that one should invest in this fund only for a year or less than that? Also, please tell me the strategy that one should follow to switch from one fund to another when one has been investing in a fund through SIPs for more than five years. Systematic transfer will take five years to completely transfer the money.
The time frame of three months to one year that has been suggested for Kotak Flexi Debt fund in the Mutual Fund Guide 2009 is the ideal time frame for which one must hold this fund.
When it comes to being a part of one’s long-term portfolio, it is important to keep a debt component so as to provide stability to one’s portfolio. Now this stability can be provided by any fixed income fund, but the reason why we suggest Kotak Flexi Debt is because of its conservative stance.
Coming to your next question regarding the strategy to be followed for transferring a long-term investment, we would suggest systematic withdrawals. Ideally, one’s investment horizon must also include the time required to withdraw or transfer the investment systematically.
In your case, you have been investing through SIPs for the last five years. It is apparent that you had not accounted for the time required to withdraw your investment. If you do not want to spread the systematic transfer over another five years, then you can consider doing it over three years.