How to Switch Between Mutual Fund Schemes

As your financial goals evolve or market conditions change, you may want to move your money from one mutual fund scheme to another within the same fund house. This process is called switching. It is a common and useful feature, but many investors are not sure how it works. This guide explains exactly how to switch between mutual fund schemes in India.

What Is a Mutual Fund Switch?

A switch is essentially a simultaneous redemption from one scheme and reinvestment into another scheme of the same AMC (Asset Management Company). For example, you might switch from an HDFC Large Cap Fund to an HDFC Mid Cap Fund, or from a growth plan to a dividend plan within the same fund.

Unlike separately redeeming and reinvesting, a switch is processed as a single transaction, which makes it faster and more convenient.

When Should You Consider Switching?

Switching is useful in several scenarios:

• Goal alignment: Your investment goal has changed — perhaps from aggressive growth to capital preservation as you near your goal.
• Risk adjustment: You want to move from high-risk equity to lower-risk debt as retirement approaches.
• Better options: A new or different scheme within the same AMC suits your needs better.
• Plan change: You want to move from a regular plan to a direct plan (within the same AMC) for lower expenses.
• Consolidation: You want to simplify your portfolio by merging investments into fewer schemes.

How to Switch Mutual Funds Online

Through an Investment App (like Bachatt)

1. Log in to the app and navigate to your portfolio
2. Select the mutual fund scheme you want to switch from (source scheme)
3. Look for the “Switch” option
4. Choose the scheme you want to switch to (target scheme) — this must be from the same AMC
5. Enter the amount or number of units you want to switch
6. Review the details including any exit load or tax implications
7. Confirm the switch with OTP or PIN verification

Through the AMC Website

1. Log in to the fund house website with your folio credentials
2. Go to the “Transactions” or “Switch” section
3. Select the source scheme and target scheme
4. Enter the switch amount or units
5. Authenticate and submit

Through MF Central

MF Central also supports switches. Log in with your PAN and select the switch option from the transaction menu.

Important Things to Know About Switching

Tax Implications

A switch is treated as a redemption from the source scheme and a fresh purchase in the target scheme for tax purposes. This means:

• If you have gains in the source scheme, capital gains tax will apply
• Short-term gains on equity funds (held less than 1 year) are taxed at 20%
• Long-term gains on equity funds above ₹1.25 lakh are taxed at 12.5%
• For debt funds, gains are taxed at your income tax slab rate

Exit Load

If the source scheme has an exit load and you have not completed the required holding period, the exit load will be deducted from your switch amount. Always check the exit load before switching.

Processing Time

The switch typically takes 1-3 business days, depending on the fund types involved. Redemption from the source scheme happens at that day’s NAV (if before cut-off), and purchase in the target scheme happens when the redemption proceeds are available.

Switch vs Selling and Buying Separately

You might wonder why you should use the switch facility instead of redeeming and reinvesting manually. The advantages of using switch:

• Convenience: Single transaction instead of two
• Speed: The reinvestment happens automatically once redemption is processed
• No idle money: Your money is not sitting in your bank account between transactions

The limitation: you can only switch between schemes of the same AMC. To move money to a different AMC, you need to redeem and reinvest separately.

Common Switching Scenarios

• Equity to debt: When nearing your financial goal and want to protect gains
• Regular to direct plan: To reduce expenses and boost long-term returns
• Growth to IDCW (dividend): When you want regular income from your investment
• One fund to another: When a better-performing fund is available within the same AMC

Switch Smartly with Bachatt

Bachatt simplifies the switching process and shows you the tax and exit load impact before you confirm, so there are no surprises. Our platform helps you make informed decisions about when and how to switch your mutual fund investments.

Download the Bachatt app for seamless mutual fund management — from investing to switching to redemption.