Mumbai: Many financial advisors advise their clients to stay invested, regardless of how volatile the market may be. While exiting a fund may be beneficial in some scenarios, it is not always the most prudent choice. Nevertheless, a financial advisor may recommend that a client should still exit from a mutual fund for various reasons.
When is the right time to exit your mutual fund scheme? Let’s take a look:
Even if you have reached your financial target, certain occurrences in your portfolio should be considered red flags that might be dragging your returns down. In such cases, it’s essential to review your fund. Although low performance for more than a year might be due to market volatility, it is better to research and obtain expert advice on the fund’s performance.
Investors are concerned about the constant change of fund managers. Funds with high rates of senior management resignations signal inefficiency in management. People often invest in a fund based on its past performance, or beginners may be more inclined to invest if the fund has a well-known fund manager. Investors should keep an eye on news related to changes in the fund managers, as the change can impact the fund manager’s style of investment and, consequently, your returns.
A high standard deviation indicates more volatility in a mutual fund. This shows how much the fund’s return deviates from the scheme’s historical mean return. A rising standard deviation usually indicates uneven fund performance, and in such cases, it is best to exit from the fund. Consistently lower performance is a crucial warning sign for investors.
If a fund underperforms its peers, it may be time to exit the fund. Instead of comparing the fund’s performance to the market, it’s crucial to compare it to its peers. Finally, suppose certain funds are no longer serving their aims. In that case, it is advisable to exit them while adjusting your portfolio, either with the help of a financial planner or an advisor.
Even if you have reached your financial target, certain occurrences should be considered red flags in your portfolio that might be dragging down your returns. Learn when to exit your mutual fund schemes. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
