Best way to reinvest in a new mutual fund after stopping the existing mutual fund

POSTED BY pradyush Mishra ON May 14, 2013 2:47 am COMMENTS (9)

Hi Friends ,

I have a question .

Is there any performance difference between a 1 time investment and Monthly SIP .

For example , If I do a one time investment of Rs 1,20,000 in a Mutual fund for 10 years , or opt for a Monthly SIP of Rs 1000 for 10 Years . At the end of 10 years , my total investment in the mutual fund would be Rs 1,20,000 .

So at the end of 10 years , will both the type of investment  return the same amount of money .

 

Reason why I am asking is I am currently investing in 2 Mutual funds via Monthly SIPS .

They are SBI MAGNUM CONTRA and RELIANCE GROWTH FUND G .

They are not performing well now and hence I have decided to stop further investments in the above Mutual funds and instead start investing in performing mutual funds like SBI Emerging Fund and Reliance Equity Opportunities Fund – Retail Plan (G) .

If I now stop the SIPs, I should be able to collect Rs 3.5 lakhs  from both the Mutual funds .

Now the question is how do I reinvest this Rs 3.5 lakhs back in Equity (Mutual funds) and also at the same time start investing the earlier amount I was investing monthly to the new Mutual funds via SIPs .

 

What would be the best way to invest all this money in the new mutual funds .

 

**** I have been asked by my financial advisor to stop further investments in the 2 non performing mutual funds .

I am sure that he would be able to advise me on the above .

Its just that I want to get some info on this before I dicuss the above with him , just for the sake of my knowledge .

9 replies on this article “Best way to reinvest in a new mutual fund after stopping the existing mutual fund”

  1. Debojyoti Das says:

    Thank you dear Ashal and dear Ramesh for your response.

  2. Dear Ramesh, Yes you are right. I’m sorry for wrong quote. I stand corrected now.

    Thanks

    Ashal

  3. Dear Debojyoti, Quantum Long Term & the newly launched PPFAS Long Term Value funds are different from other funds. Both these funds are not offering any trail commission. So the maturity amount for both these funds ‘ll remain same be it direct or through fundsindia.

    In case of other funds like HT200 or FIBCF or IDFC PE……. the maturity amount ‘ll be different for fundsindia & direct investing.

    Thanks

    Ashal

    1. Ramesh says:

      PPFAS fund has two different plans – one with distributor code (expense ratio upto 2.5%) and one without (2.0%).

      please check it again.

  4. Debojyoti Das says:

    dear Ashal and other experts,
    I have a follow up question on your response to Pradyush. You said the trail commission will be saved if invested directly with the MF house rather than through AMC. Kindly elaborate.

    Example: I have account with FundsIndia.com and have equity investment of Quantum long term equity fund (QLTE) through monthly SIP. Now in that case, suppose if I get XL after 10 yrs. through redemption, is that I will get XL + Y if I would have done the same SIP of that very amount directly through Quantum online? Please clarify.

    Note: I had a discussion with Quantum relationship executive over phone last week and he mentioned, as Quantum is not giving any brokerage to FundsIndia, therefore, if I invest in QLTE either directly or through FundsIndia, the return would be the same XL. I am confused now.

    Is that the same with other MF house as well like HDFC, DSP, etc? This is important to know as equity is long term horizon and if there is a 0.5-1.0% trial commission, we should always go for direct fund house if capable which will save huge sum.

    regards
    debojyoti

  5. Dear Pradyush, as you are existing investor with respective AMCs, please contact there to convert your old holdings into new funds under direct mode. You ‘ll save on trail commission also.

    Thanks

    Ashal

  6. pradyush Mishra says:

    Thanks a lot for the quick and prompt replies .
    I will proceed with the reinvestment ASAP .

    However I have one more question .
    I had invested in my current MF’s through a Agent .
    Do I need to contact the agent again to stop investments in the MF’s and stop the ECS or are there direct methods available where I can directly stop these sips .

    Also Can i directly now start investment in the new MF,s .

  7. Dear Pradyush, in case of course correction i.e. switching from non performing funds to performing ones, please redeem & invest in one go. the answer is simple. You are merely changing your passanger train to Rajdhani so there should not be a delay by adopting SIPs. The money was already in Eq. & there is no risk involved here that what ‘ll happen if market go up or down after your course correction. 🙂

    So the final words, invest in lumpsum.

    thanks

    Ashal

  8. Invest the 3.5L in a good fund as a lump sum and start a new SIP in it as well.

    This question
    Is there any performance difference between a 1 time investment and Monthly SIP .

    is relevant only when investing for the first time in an equity fund and not when transferring from one equity fund to another

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