fund switching

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Fund switching

Moving money within a mutual fund family from one mutual fund to another.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Fund Switching

The practice of selling shares in a mutual fund and using the proceeds to buy shares in another mutual fund. An investor does this when economic conditions or his/her investment goals have changed. Because of the fees (known as loads) associated with buying and selling mutual funds, fund switching can be expensive unless one is switching within a fund family or between no-load funds.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

fund switching

An investment activity in which shares in one mutual fund are sold and the proceeds from the sale are reinvested in another mutual fund. Fund switching results from an investor's changed perception of investment opportunities. For example, an individual may become bearish and switch money from a growth fund to a money market fund. Because of the high sales charges involved in purchasing some funds, fund switching is practical only if no-load funds are used or if the investor switches within a family of funds.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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However, there are many other things to consider and compare before switching funds. The main reasons are policy features (some pensions offer guaranteed benefits), costs and charges (these can vary widely and affect the level of your fund over the years), fund choice (your appetite for risk), performance (how a fund has performed in the past) and potential exit penalties (these could take a chunk from your savings).
Switching funds too often also is a bad call for those looking to retire.
No tax is levied on switching funds from equity to debt or vice- versa.
Usually, there are fees associated with switching funds, but we feel that this may be discouraging to some.
CLA deputy president Henry Robinson said: "Farmers in England will be severely disadvantaged if modulation is at 15% - the full amount possible - which is not in alignment with our European neighbours, who may even benefit by switching funds from rural development to direct payments.
Switching funds will not generate a tax charge, but there could be a fee for switching.
Switching funds to public health, trying to cut the number of people requiring treatment in the first place, sounds like an attractive idea.
"Clearly when switching funds there are costs involved, so these should also form part of the investor's decision-making process," Dowding said.
For switching funds on the Platform, there is normally a charge of 0.25 per cent of the value of the switch for investment funds, particularly within an ISA.
They have spiked in recent weeks amid fears over global economic uncertainty, with investors switching funds from currencies and equities to commodities such as oil.
"These are buyers in their 30s and 40s who are using buy-to-let as their new pension by switching funds from traditional stock market-linked schemes into property.
The plan is that risks are reduced as the maturity date approaches, by switching funds from shares to bonds and cash.