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Switching

Reviewed by Apoorva | Updated on Sep 30, 2020

Catalogue

Introduction

Switching is the process of transferring investments. Investors may wish to switch from one fund to another to reach their financial goals. There may be numerous costs involved with switching.

Understanding Switching

Investors have the option to transfer brokerage assets or liquidate a position in exchange for other securities.

Many investment companies allow investors to switch their assets to a different share class or fund. Brokerage accounts incur switching when investors choose to transfer assets from one brokerage to another.

Factors to consider before you invest

  1. Some funds offer exchange privileges where shareholders can transfer their investment corpus from one fund to another.

  2. A fund exchange with no transfer fees will still be responsible for differences in price among the funds involved.

  3. An investor will incur a capital gain when a fund is exchanged for a lower value. Fund exchange policies are discussed in a fund prospectus.

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