Published: 15th July 2024
We give you 7 instances
By: Value Research
A change in the fund manager can significantly affect performance. Consider selling if the longest-serving manager or the fund manager you specifically invested for leaves or if there's a change in the CIO.
Direct equity plans deliver higher returns than regular plans due to lower expense ratios. Basically, they help build greater wealth. However, ensure you know the right funds to invest in and whether you can shift tax-efficiently.
Start a Systematic Withdrawal Plan (SWP) 2-3 years before reaching your goal to mitigate market volatility risks. This phased withdrawal protects your investment from sudden market drops.
A rapid decline in fund ratings can be a red flag. If a historically strong fund's rating drops, give it a year or two. For new funds, consider selling if there's no improvement within 3-6 months.
It’s pretty rare, but a fund can change its objective or style. In this case, ensure the revamped fund matches your risk profile and investment goals. If not, look for better options that suit you.
An underperforming fund over 3 years will likely remain a dud over five years, too. In fact, there's a 77% chance of that happening. So, if a fund is a dud for 3 years, you should sell the fund.
Asset allocation is important. Rebalancing to revert to your original asset allocation (say 75-25 in equity-debt) can help you sell your equity funds when the market is high. This way, you are selling equity at a higher price.