In mutual funds, a switch refers to the action of transferring an investment from one scheme to another within the same mutual fund house (AMC). This facility allows investors to move money between schemes—such as from a debt fund to an equity fund—without having to redeem and re-invest the funds manually.
Switching is a convenient way to realign your portfolio as per changing goals, market outlook, or risk preferences. The transaction happens internally within the AMC, and new units are allotted in the target scheme based on the applicable NAV.
Scenario | Explanation |
---|---|
You want to rebalance your portfolio | Switch helps move funds across asset classes without exiting the fund house. |
You’re unsure about tax impact | Switches are taxable—capital gains rules apply on redeemed scheme. |
You initiate a switch close to cut-off | NAV of redemption scheme and target scheme may differ based on timing. |
You want to switch between fund houses | Not possible—you’ll need to redeem and invest in the new AMC separately. |
Last updated: 16 Jun 2025