Six questions to ask before selling your mutual fund

"Forever". That's Warren Buffett's standard answer when asked, "For how long should you hold your investment?" While we at Value Research are also advocates of buy and hold for the long term, the success of an investment ultimately lies in selling. In the words of our CEO, Dhirendra Kumar, "There is no such thing as buying well; there is only selling well. Because if you don't sell well, then the buying does not matter." The key here is to sell well. So, here are six questions you must ask before selling your mutual fund investments. 1) Does the change in fund manager warrant a sale? Although fund houses downplay the effect of a change in fund manager, in reality, it can significantly influence performance, for good or bad. For instance, the HDFC ELSS Tax Saver Fund saw a turnaround in 2022 after a new fund manager took over. Conversely, the Motilal Flexi Cap Fund experienced a decline in performance after its long-term manager departed in 2019. These two examples highlight the uncertainty of managerial changes. That said, the mutual fund industry is prone to changes. So, switching funds each time a fund manager changes is impractical. Instead, sell your fund only if the longest-serving manager changes or if you had initially invested in the fund because o

This article was originally published on February 12, 2024.