Switching to Growth option

Please advise whether changing a plan from dividend option to growth option after the lock-in period of one year entails further lock-in period of one year?
- Sunil Verma

We understand that you intend to refer to the exit load which is chargeable on investments redeemed within a year from a specific fund.

A switch from Dividend to Growth option is a redemption and purchase in the scheme. To put it more lucidly, both plans, growth and dividend have a different NAV. When you withdraw your investments after a year, they will attract exit load depending on the fund's mandate for the same. Now when you switch to the Growth option, this will be considered a fresh purchase and the exit load will be applicable as available, i.e. if the fund mandates exit load up to a year, it will apply on your investment in the growth option for a year.

This article was originally published on June 25, 2013.