How does one decide when to redeem a mutual fund? What would be the correct way of exiting a fund that suddenly starts to underperform?
-Abhishek
The primary reason of redeeming your investments would be the fulfillment of your investment objective and goal. Apart from that, the underperformance of a fund is another important reason to redeem your investment. However, you shouldn’t consider redeeming only because you’ve been investing for a few years. Continue investing if saving is your goal and your fund is performing well enough. If a fund suddenly stops doing well, you should give it some time. Don’t redeem in haste because a brief period of underperformance is possible even in well-performing funds. You should evaluate the fund’s performance on a relative basis. For example, you shouldn’t be disappointed by a fund’s fall of 15 per cent if the markets have fallen by 20 per cent during the same time period.
This article was originally published on July 03, 2012.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
