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How Should I Shift Money From My Existing Equity Funds To Scripbox?

As I see it, your goal is to improve the quality of your portfolio and you have two ways to do it: One, Switch all the money to scripbox funds Two, Redeem all the existing funds, keep the money in the bank and invest in scripbox funds over say 6 months.

Question: I have been investing in Scripbox for an year now. I also have other mutual fund holdings from the past. I would like to redirect my investments into the Scripbox portfolio. This would help me simplify my MF investment and also get out of non-performing funds, but still stay invested for the long-term.

So my question is, what should be my strategy to switch those investments into the Scripbox portfolio. Should I take the SIP route, or just make a one-time purchase into Scripbox funds. One-time doesn't look like a good idea to me. If I do SIPs, how should it be distributed, in terms of tenure?

Answer: Let's answer this by asking a different question. What is your goal in undertaking this activity?

As I see it, your goal is to improve the quality of your portfolio and you have two ways to do it:

  1. Switch all the money to Scripbox funds immediately after redemption
  2. Redeem all the existing funds, keep the money in the bank and invest in Scripbox funds over say 6 months.

Option 1, above, is a choice of investment instrument. All your money stays invested in equity asset class - only the funds are different. This is most aligned to your goal of improving your portfolio. The only consideration here is to ensure that the holdings you redeem are all long term to avoid exit load and short term capital gains tax.

The 2nd option shifts money from equities to cash. This is NOT aligned to your goal of improving your portfolio. Instead, it shifts money to a lower return asset class and introduces a market timing decision.

By restating the question as above, the answer becomes clear.

Note: This situation is quite distinct from one where you are investing cash into equity mutual funds. In that situation, you are taking the decision to shift money from one asset class (Cash) into another (Equity).

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