Best time to sell Your Mutual Fund Scheme?

Your mutual fund scheme might have made good returns in the past with some great options for stock future tips. However, there could be some signs of bad performance and you may need to get out of such MF schemes. There are various reasons/scenarios where you need to sell your mutual fund schemes.

1) Performance compared to benchmark: If your MF is not providing good returns, there could be several reasons. However, if your mutual funds are underperforming compared to the benchmark, then you should check the scheme details and sell such mutual funds. E.g. if a large-cap mutual fund "X" scheme has given 10% annualized returns in last 5 years compared to SENSEX, which has given 13% annualized return, then your X scheme is under-performing. You should check the reasons before exiting.

2) RBI Repo Rate impacts Debt MFs: When RBI cuts down in repo rates, bond yields will drop and prices would go up and this would improve returns in debt funds. When you see that interest rates are going in an upward direction, your debt fund returns fall. Hence, in this situation, you should take a call and get out of debt funds. However, you should review the RBI direction towards repo rate and not just one instance.

3) Redeem based on your goals: Though your MFs are performing well, based on your financial goals, you may need to switch between equity and mcx live tips to debt. Another example is about meeting a planned financial goal 2-3 years ahead of time. In such case, you cannot invest in equity funds till the last minute of the goal. You may sell equity MF and then invest in debt funds or debt related instruments.