Mutual funds have existed in India for some time now. However, only a small fraction of individuals actively trade mutual funds. Lack of awareness is one of the fundamental problems for less participation, and individuals willing to invest must understand the smart ways to buy and sell mutual funds.
Mutual funds are pools of investments from different investors with similar investment objectives and are managed by experienced fund houses known as Asset Management Companies (AMCs). These funds have a significant investment horizon and are less volatile than stock market investments. Read the article below to learn how to sell mutual funds smartly.
How do mutual fund selling and buying work?
Mutual funds are versatile investment instruments that can be bought or sold in several ways. After you have completed your paperwork, you can buy or sell a mutual fund through various fund houses offering suitable funds that align with your investment objectives.
You can approach a fund house or Asset Management Company (AMC) online and purchase or sell a suitable fund. Alternatively, you can contact a trader and book a purchase or sell request over a call. Another convenient method to trade a mutual fund investment is placing an order with your brokerage firm agent.
Investment through agents and brokers includes the advantage of having a financial advisor. Since they actively buy and sell mutual funds, they have a greater understanding and experience of how these funds work. However, they may charge a nominal fee for operating your investment account.
On the other hand, selling and purchasing mutual funds online is considered the fastest and the most affordable way. You can visit the AMCs (Asset Management Company) portal and liquidate your mutual funds conveniently.
How to sell mutual funds?
Selling a mutual fund requires the same research and understanding as buying it. It would help if you waited until the market was at the right index to maximise your returns. To sell your mutual funds, you can follow the steps mentioned below:
- Contact your financial advisor or mutual fund company
Contact your financial advisor to initiate the selling process and place a selling request. If you have purchased a mutual fund directly from an asset management company. You can reach them online and offline and make a selling request.
- Enquire about the fees
When selling your mutual funds, you may need to pay a nominal fee to the asset management company or fund managers for managing your mutual funds. Before making a selling request, enquire about these charges and consider your profitability while selling your funds. You may also have to pay a sales charge if you have purchased a mutual fund with deferred sales charges.
The fees or charges depend on the asset management company and the duration you stay invested in a mutual fund.
- Decide on the number of units you wish to sell
You cannot sell mutual funds on the real-time unit price as the prices are decided at the end of every business day, and you need to place a selling request before the cut-off time.
However, while selling a mutual fund, you may need to sign a form for your asset management company mentioning the selling request and the number of units you wish to sell. If you have applied to sell your mutual funds over a call, you may be asked to fax a written letter. A written letter is a security that can be sold only after your consent.
- Instruct how you wish to receive your money
Finally, you can instruct AMC to send your money through various modes, including cheque payments or direct bank account transfers. You can also invest the received money in purchasing a new mutual fund. If you want to move your money from one mutual fund to another in the same company, you can exchange funds and save time and money.
With the influence of digital technologies, buying and selling mutual funds has become very easy. You can visit an asset management company through various online and offline modes to trade mutual funds that are suitable for you. However, you must ensure adequate research when buying or selling mutual funds.