Investing in mutual funds is not easy process as that is done after lot of research as which fund suits your needs, or you have good mutual fund advisor who suggest you funds as per needs, but after words advisors play no role or don't tell his client to exit from funds if not performing well, or even if advisor suggest many investor don't understand and still hold the funds which give no returns.
check these points which help you to take correct decision to exit from mutual funds or when is correct time to exit:
1. The fund is not performing:
If fund is consistently not performing, then its better to exit from those funds, even if you have loss in such funds, as holding them long with not going to change its performance.
2. Change in Fund manager
If after change in fund manager and that results in affecting the performance of your fund drastically, then one should go for exit from such funds. A change in the fund manager should normally not be a reason for you to dump your fund. Even if a star manager leaves a fund house, it should not make you press the panic button. Instead, keep a watchful eye on the incoming fund manager for a while - his investment style, churning frequency, stock selection, asset allocation strategy etc. If you are satisfied with his
approach, then just stay put. Give at least 4-5 months for the new fund manager to find his feet before taking
3. You reached your targets
Investment should be done with a goal in mind Once your investment reaches the targeted amount, you should redeem it. There's no point in continuing the investment even though your objective has been achieved.
Equity returns go through a cycle and if you find at one point that your goals have been met, it is better to withdraw your money and reduce your risk.
4. When your Portfolio requires rebalancing
Asset allocation is key to success and one should invest considering age and risk bearing capacity.
For example when you started investing in age of 30 your risk bearing capacity is high so you can able to invest 70:30 but when you grow old and reaching the retirement age or progressing in your life, one should keep re-balancing from time to time.
5. The funds objective is changed:
You chose a fund because its objectives aligned with your needs. But if the fund has deviated from its stated objective, either through a change in the investment mandate or otherwise, you should consider exiting it.