I am investing ₹1500 each in the regular plans of HDFC Top 200 Fund from June 2012, SBI Emerging Business-(G) from January 2013. Both are through monthly SIPs. Now I want to switch from regular plans to direct plans of the same fund as the expense ratio is less in the latter. Is it the right time to do so?
- P.V.Manoj Krishna
Such a switch will reduce your annual expenses and improve your returns from the fund. But switching from regular plan to direct plan will attract exit load as given below:
If you invested through a distributor, any switch-out of these units from Existing Plan to Direct Plan of the same or other scheme shall be subject to applicable exit load, if any.
If you invested without any distributor code, then exit load will not be levied on switch-out of units from Existing Plan to Direct Plan of the same Scheme.
In case of SIPs under both these funds, you will incur an exit load on investments which have not yet completed one year. A better option would be to stop these SIPs by signing a simple 'SIP Stop Request Form' and begin a new SIP directly with the two schemes under their Direct Plans. You can switch/withdraw older investments when they complete one year. This way you will save on exit charges.
This article was originally published on November 27, 2014.
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