VR Logo

When to Redeem

Evaluate a fund’s performance on a relative basis before you decide to redeem your investments…

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?

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.

Post Your Query