Hello Sreekanth,
I've been investing in MF for 7 years in 5 funds max in regular plans thru SIP. I did re-balance my portfolio 3 times due to non-performs and FM change, etc.
After recent tax imposition, we need to pay 10% tax as LTCG after 1+ year, if we do re-balance the portfolio & expense around 1.5% max. This will eaten away significant profit.
Would it be a good idea to invest in index ETF, where there's no / negligible expense, no fund manager dependencies and no need to re-balance business as it tracks the market movement.
Time for me to re-balance my portfolio and bring down the funds / ETF to 2-3 max from 5 and each around 40K/PM.
Appreciate your valuable inputs.
Regards
Mukesh
2 Answers
Dear Mukesh,
After the recent SEBI's reclassification, most of the popular Funds may maintain similar set of portfolios (there is a high chance of portfolio overlaps). Hence, a strong case is building up to add index based funds to our portfolios.
However do note that re-balancing of ones portfolio on a regular/often basis is not advisable.
Related articles :
Yes, switching from Regular plan to Direct plan of a Mutual fund scheme is considered as normal redemption and is subject to taxes.
Kindly read :
- Switching to Direct Mutual Funds From Regular MFs? Keep in mind these handy tips!
- 10% LTCG Tax on sale of Stocks/Equity Mutual Funds | Budget 2018-19 Proposal
- Mutual Funds Capital Gains Taxation Rules FY 2018-19 (AY 2019-20) | Capital Gains Tax Rates Chart
- Budget 2018 LTCG Tax on Equity Mutual Funds & Important Implications
Please login or Register to submit your answer