I want to know whether this is the right time to switch units. I have units in some mutual funds which I want to get out of. However, these units are down by about 50 per cent. Does it make sense to sell these units at a loss and pick up units of other better mutual funds?
-Inder Pal Singh
The basic question that one must ask himself when faced with such a situation is whether or not the fund in question is a good fund. If the fund is a consistent player and has displayed its ability to perform in the past, then it makes sense to hold on to the fund as the current fall may have stemmed from the turbulent market conditions and it is likely to do well in the future.
In case the fund you hold has not been a stable performer in the past, then it is better that you get out of the fund and invest in a better fund with a proven track record. Keeping in mind the current dismal scenario, it is advisable to opt for well-diversified large-cap funds that have displayed consistent performance in the past.