The capital market is vast, and it gives investors many ways to invest in the market. In the market, there are many investment instruments available that enable investors to invest in a fund. Investors, who want to create wealth by saving, participate in significant investments. But the drawback to this is that tracking the performance of each fund after a specific time frame becomes tedious, and the hard part is to decide when exit and redeem from a fund. The golden rule of capital market investing knows the right time to buy, hold, and redeem the fund.
Most mutual fund companies are allowing redemption from mutual funds. However, mutual funds have separate terms and conditions for redemption. Before investing in the ICICI Prudential Value Discovery Fund, investors are advised to keep a thorough knowledge of the unit redemption guidelines.
Experts suggest that the right time to redeem a fund varies from investor to investor as it depends on the financial appetite and goals of the investors. One investor may have a short-term financial goal of buying a car while another may have a long-term financial goal, such as planning for retirement or buying a home.
Therefore, if the investor reaches the end of a pre-determined deadline, it is suggested that the investor redeem the fund and that too regardless of market conditions.
The main reasons for investors to redeem a fund are:
When the financial goal is met: The most common reason for a fund to be redeemed is after the investor has achieved the financial goal because the investor is no longer interested in going forward on the investment. It is appropriate to redeem the fund.
When the Asset Management Company does not deliver as promised: The main reason behind the investors investing in a specific mutual fund scheme is the investment objective. If the financial goals of the investors and the investment objectives of the scheme are in sync, the investors usually invest in such mutual fund schemes. However, if the asset management company does not meet the results given in the investment target, the investor may look to capitalize on the fund by pulling the investment.
When the market conditions are favorable: When markets are moving higher, many investors usually redeem their investments from mutual funds. It is because their investment gets good value. But in practice, cashing out a fund under favorable circumstances may not always be a good investment strategy, as long-term returns may be more attractive than short-term gains.
Mutual fund schemes do not work as expected: There may be some market conditions that can lead to underperformance of mutual funds. In such a situation, investors think that it is safe to redeem the fund.
Conclusion: Therefore, some reasons for investors to redeem the fund are given above. However, it is highly recommended to avoid redeeming mutual funds that are created to meet a goal. It is also recommended that an investor should remain mindful of redemption terms and conditions, such as exit load, tax result, etc., before redeeming the fund.