Investors are often confused as when it is the right time to exit a mutual fund scheme because exiting a scheme in haste can result in reinvestment risks and transaction charges.
Let's have a look at some of the common queries asked by investors
Should I redeem because the markets have touched new highs or valuations are expensive?
Many investors believe that they should book profits in mutual fund schemes when the markets are rising or near top. On the other hand, when the markets are falling, investors are of idea that they can cut on their losses by exiting the same at earliest.
But according to financial planners, investors should be aware that the fund manager is booking profits and cutting losses for you. He is continuously selling stocks, whose performance deteriorates or whose outlook is not favourable, and buying stocks whose performance is improving. Hence, there is no point in redeeming units because the markets are at a new high or on a downward trend, as reported by ET.
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