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DSP BlackRock is the latest fund house to have introduced this facility this month, joining the AMCs that have been offering it for the past couple of years. These include Birla Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, IDFC Mutual ...
Our busy schedules leave us little time to track the markets and know exactly when to invest in a mutual fund scheme or when to exit one. If you don't want to lose out on investing opportunities, a good idea is to avail of the trigger facility provided by asset management companies (AMCs).
This tool allows you to fix a date, price or index level at which you want to enter the market and get out when the expected returns have been achieved.
"When the market starts moving up, investors often raise their previously set targets without booking profits. Realisation sets in only when the market corrects itself and reaches a level where investors either fail to gain or even lose their investments," says Sankaran Naren, CIO equity, ICICI Prudential AMC.
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The trigger mechanism is especially useful for passive and conservative investors, who can set a trigger amount or a percentage of appreciation, and based on this, their money can be shifted from equity funds to debt funds. Kalpen Parekh, deputy CEO at IDFC Mutual Fund, says, "It helps you build a profit discipline so that you accumulate at the right time and exit when your return expectations are met."
So, one can choose targets based on near-term goals, such as buying a laptop or going for a holiday. Says Ajit Menon, executive vice-president and head of sales at DSP BlackRock Mutual Fund: "This feature can help investors and financial advisers in planning for financial goals."
DSP BlackRock is the latest fund house to have introduced this facility this month, joining the AMCs that have been offering it for the past couple of years. These include Birla Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, IDFC Mutual Fund, Principal Mutual Fund, Reliance Mutual Fund, Tata, Quantum and UTI Mutual Fund.
There are several trigger options (see Types of Triggers), though these differ between fund houses. However, each of these will help you earmark the point at which you want to redeem your funds or shift from one type of fund to another. For instance, if you choose to switch appreciated capital, you can fix a percentage of gain, say 10%, 30% or 50%. When your investment amount grows by this figure, the profit you have earned can be moved to debt funds, while the original amount remains in the equity fund.
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