What is the best time to switch from Regular to Direct MF?

Hi,

Can someone please explain to me what is the best time to switch from regular to direct fund? I had invested through advisors in regular mutual funds. Later I had stopped SIP and opened same funds in direct mutual fund and started SIP there.

I wanted to know if it is the right time to switch to a direct fund. (Exit charges= 0 as it been a year)
I am very much confused if I should switch to direct funds since the market is down. Few people have said it is the best time as the market is down while few have advised switching only when the market is up so that I can get more units.

Please advise the correct time to switch to direct funds (exit charges = 0). Is it when the market is down, or when the market is up?

Timing the markets never works.If you are a long term investor please dont mind about the daily market fluctuations.If your exit load is 0,better to switch to direct funds now to avoid unnecessary commissions.

Everyone is going to have their own opinion, You have to listen to yourself and do what you think is best. I personally like to invest or accumulate more fund units when markets are down, as I think when markets are up they are already trading at premium valuations.

There is no better way to time the markets, keep that in mind. If markets are low and are oversold they can go even lower, if markets are high and are overbought they can still go even higher.

Right, but when do I get more units? When I switch when the market is up or down? My observation if I will get more units when the market is up.

Right, but when do I get more units? When I switch when the market is up or down? My observation if I will get more units when the market is up.

How are you going to get more units when markets are up? If minimum investment is 100 and NAV 10 when markets are higher you will get 10 units, with same 100 and NAV at 8 you will get 12.5 units when markets are down.

I had switched for one of my funds when the market was up in Jan 2020 and yesterday when the market was down. Please find below my findings in Direct fund. Amount invested and No of units, both are less when the market is down.

**Market was up: **

Date: 16 Jan 2020
Amount invested: 5,736.28
No of units: 97.599
Nav: 58.774

Market was down:

Date: 11th Jun 2020
Amount invested: 4,229.34
No of units: 89.283
Nav: 47.37

In January you invested Rs.5736 had you invested same amount in June you would have got 121 units but you invested 4229, hence the less units.

Right, but it was a switch and less amount got invested. So indirectly, it means that it is beneficial when you switch when the market is up?

Doesn’t matter when you switch, you will be alloted units according to your investment’s current value. If you invested 5000 and your investment value is 5500 you will get units according to that value, if you invested 5000 and your investment value is 4500 you will get less units.

Sorry but I am still not getting how it does not matter when we switch.

I think it matters when I switch as I will get more units if the market is up. Switch is redeem and invest, if the market is down during switch, I am losing my units as my amount will be less.

The number of units don’t mattter. What matters is the value of your investment.

1 until of Rs 100 and 10 units of Rs 10 = 100.

Stop looking at the number of units and focus on the return you are getting.

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See, If you invest 5000 and get 500 units in return and at time of switch your investment value is 4500 with 450 units, when you redeem and reinvest you will get 450 units at 4500, when your investment value goes up to 5000 again you will again have 500 units in another scenario, if you invest 5000 and get 500 units and value goes up to 5500 you will have 550 units, when you redeem and invest again you will get 550 units at 5500, after that if value comes down to 5000 again you will have 500 units.

So it doesn’t matter where you make the switch, how many units you get depends on your investment value at the time of switch.

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The number of units that you are assigned when you switch is irrelevant.

What is relevant is the amount of money that is first being redeemed and later invested.

Irrespective of the NAV, in a “switch” the amount will remain the same (except for the marginal STT).

Bottomline: the answer to your question is that you can do the switch from Regular to Direct any time and the current NAV will make no difference.

Thanks