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Can I sell some part of my investments in mutual funds?

Is it possible through mutual fund investment to redeem Rs 25000 in lumpsum for use of another personal finance purpose? Are there any charges?

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5 Approved Answers

aniket

Yes, you can sell some part of your investment in mutual funds as they are voluntary investments. Having said that, one should avoid withdrawing money from it as it reduces the return to investor and fees are levied at the time of partial exit as well. You must read the terms of the investment carefully and look for exit load. Exit loads are generally charged on investments redeemed within 3 months. However, different fund houses may have different lock-in periods for different schemes.

You can withdraw from mutual funds by simply giving a request to your fund manager. It is important to note that capital gains tax will be charged on such withdrawals. To further understand tax structure applicable to mutual fund units, click here.

You may also redeem your entire portfolio and start a new portfolio with the reduced amount if you want to invest the remaining amount in another scheme.

In case you anticipate future regular withdrawals, you can also indulge in Systematic Withdrawal Plans (SWP). It allows you to withdraw a fixed amount from the mutual fund investment at a pre-set date every month, quarter or year, according to your needs. This means that the investor receives a fixed amount on each specified date, by selling the required number of units. The number of units however may vary depending upon the NAV at the time of sale.

Hope this answers your question!

Arpit Chandak

Yes, you can sell part of the investments in mutual funds to redeem money but the mutual fund may or may not charge on this withdrawal as it depends on the type of fund and mutual fund distributors.

If your lump sum amount is invested in equity funds, then most of the equity funds do not charge any fees if redemption takes place after 1 year.

When an investor sells or liquidates the mutual funds, the fund house charges fees on redemption of the funds which is called exit load. However, some funds don’t charge any fees on redemption if withdrawal after a certain period of time.

  • For investors, a fund which charges no exit load is better than funds which charge fees as it provides flexibility and liquidity to investors. Exit loads are imposed on mutual funds to discourage withdrawals. Fund manager wants investors to hold the fund for a long time as time horizon provides proper analysis time and make them invest in growing companies.
  • Some funds levy flat exit loads whereas some funds charge differential exit loads. If an investor is withdrawing money in the early phase, the higher fee is charged in comparison to withdrawing funds after a long period of time. On an average, an actively managed equity fund charges 1 % exit load on redemption of funds and on the other hand, index funds also charge an entry load of 1 %.
  • Exit loads are also applicable to Systematic Investment Plan. If the lock-in period for the SIP installment is 12 months, the exit load will be applicable within the same time frame. Every fund defines its own exit load and that is why investors are expected to read the terms and conditions of the fund carefully. In most cases of exit loads, it is generally in the range of 0.25 to 3 %. A mutual fund typically charges exit load on short-term funds for a short duration of 60 to 120 days. Exit load might not be charged for ultra short-term funds.

Another way to invest your money is in Systematic Withdrawal Plans (SWP). It allows you to withdraw you a fixed amount from a mutual fund at a fixed interval. It can be considered the reverse process of SIP. So you can put your savings in a mutual fund and withdraw regularly from it.

Happy Investing!

Devanshu Gupta

Yes, it is possible to redeem a part of your investment or your full investment at any point of time. The charges applicable on redemption vary from fund to fund and depend on the duration of investment. Some funds have zero exit load whereas sum funds have an exit load of around 1% if the investment is redeemed within a year of investment.

Exit load is the percentage of your total investment that is deducted as a charge for an early exit from the mutual fund. Asset Management Companies charge exit load to motivate investors for remaining invested in the fund for a longer period of time so that they can earn higher profits and also at the same time the cost of transactions for the AMC reduces.

To check the exit load of your fund on Groww website:

1.     Click on details on the fund page

2.    Scroll down and see the exit load on bottom right of page

To read more about exit load please click here

Mridul Agrawal

YES. Investors are free to sell a part of their investments in mutual funds whenever they chose to. The only exception being ELSS funds, where investors can not withdraw their investments until 3 years.

Both the amount and frequency of withdrawal of investments can be altered as per the requirements of the investor.

The investors may also opt for Systematic Withdrawal Plan (SWP) wherein the investor can withdraw a fixed amount of money from a mutual fund at a fixed interval. SWP is somewhat the reverse of SIP.

For redemption of funds on Groww, the process is very simple. Just by clicking on Redeem, and selecting the desired amount, redemption process is completed. Investors can receive the redeemed amount in only 2-3 days.

There are no additional redemption charges by Groww, however, some funds may levy an exit load upon redemption of investments.

Ankit

Some part of the investment can definitely be sold in mutual fund. Selling a part of the investment is very much same like selling the entire amount invested in the fund.

It is upto the discretion of the investor on the amount he/she wishes to redeem. For redemption of mutual funds:

·     Select the fund among the investments that an investor wants to redeem

·     Select the amount that the investor wishes to redeem

·     For offline redemption, a form needs to be filled

·     Alternatively, for online redemption the investor needs to redeem online

·     The amount is transferred to investor’s bank account in next 2-3 working days

For redemption of funds on Groww, the process is very simple. A redemption option is available in the fund an investor has invested in. Click on Redeem, select the amount to redeem and confirm. The amount will be transferred to the investor's account in next 2-3 working days.

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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