Switch — Mutual Fund Term Explained

Moving investment from one mutual fund to another within the same fund house. Treated as redemption + new purchase for tax purposes.

A switch moves your investment from one scheme to another within the same AMC. For example, moving from HDFC Liquid Fund to HDFC Flexi Cap Fund.

Important: a switch is treated as redemption from the original fund and fresh purchase in the new fund. Applicable taxes and exit loads apply.

Related terms

• STP (Systematic Transfer Plan) — Automatically transfer a fixed amount from one fund (liquid/debt) to another (equity) at regular intervals. Used to deploy a lump sum gradually.
• Redemption — Selling mutual fund units back to the fund house. Proceeds credited to your bank in T+1 to T+3 business days.
• Exit Load — A fee charged when you redeem mutual fund units before a specified holding period. Usually 1% if redeemed within 1 year. Nil after the lock-in.
• LTCG (Long Term Capital Gains) — Tax on mutual fund gains after the qualifying period. For equity: 12.5% on gains above ₹1.25 lakh/year after 1 year. For debt: slab rate.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.