The ‘When' And ‘Why' Of Selling Equity Mutual Funds

Exiting a particular equity mutual fund is, at most times, triggered by a panic reaction to the behaviour of the stock market. This should not be the case. Investors need to be clear in their mind about the motive behind making such an exit and then timing it right

There are various kinds of mutual fund investors in accordance with thought processes and inclinations. Some of them believe that having once bought a fund, it’s all right to remain invested forever and thereby create wealth. Then there are others who think that the best policy lies in getting out of a fund if it is fetching lower returns. In addition to these two extremes, there are investors who squat in the middle, and neither marry the fund nor are in a hurry to move out of the fund without prior due diligence. For some investors, the rate of return is the enticement factor and hence they constantly seek funds that give them higher returns.

However, investors need to be extremely careful while exiting their equity mutual funds. In this article, we are going to discuss when you should consider ditching your equity mutual fund. But before moving deep into it, it’s important to understand that mutual funds are not stocks. And hence, it does not in any way mean that a decline in the stock market should trigger exit from mutual funds. Stocks are individual entities, whereas mutual fund schemes are portfolios of stocks. And hence it would be futile to engage in market timing to exit from a fund. So, when should you sell your equity mutual fund? Here are some salient factors:

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