Therefore, if you are nearing the financial goal that you were saving for, and you need money, you could redeem your funds.
Under such circumstances, if the fund no longer suits your goals, or is not in line with your risk appetite, you could plan on redeeming the fund.Īmong the various advantages of mutual funds, their ease of buying and selling, professional management, inbuilt diversification mechanisms, are some of the top factors that make them ideal for investors to meet their future goals and financial requirements. Market movements also impact asset allocation significantly. Usually, experts say asset allocations change due to differential returns from various asset classes. Ii) balanced funds – 65 to 80 per cent in equity and/or 15 to 35 per cent in debt securities, and 0 to 20 per cent in money market securities. I) equity funds – invest 80 per cent–100 per cent in equity and/or 0–20 per cent in money market securities While a fund manager can change allocations, but only within the limits specified, not beyond them. For instance, while most equity funds usually invest fully in equities, some schemes also split their allocation between equity and the rest in other sectors such as debt or allocation between domestic and international equity. The asset allocation of a mutual fund scheme depends on the type of scheme it falls under. Various asset classes such as equity funds, debt funds, balanced funds, etc. Here are some of the instances when you should consider exiting your fund Additionally, if you find out that there are many similar types of funds in your portfolio, selling some of them could give the investor’s portfolio a more diversified look.
For instance, if your fund is consistently underperforming, or if there are changes in objectives of the scheme that are no longer in line with your goals, you could consider redeeming your funds.