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Switching "Switching" refers to the movement of assets from one mutual fund to another usually when the investor's investment objectives change in some way or because prevailing market conditions make ownership in one fund more attractive than ownership in another. Normally this is done within a family of funds but this does not have to be the case. Most brokerage houses do not charge a fee for a given number of transactions per year. (When that number of transactions is exceeded, however, fees normally apply.) Many mutual fund advisors caution against fund switching as a practice that actually serves to lower investors' returns and suggest that in all but the most extreme cases it is better to trust the expertise of fund managers to follow market flow and to make necessary corrections to preserve a given fund's earning position. Certainly mutual fund switching is not a practice that should be engaged in frequently and should be based on research and counseling with an investment professional. More Terms Explained here |
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