I stopped investing in several poor performing funds and have now many of them. Should I wait for these funds to get better? What is the way out? Should I initiate STP from these funds to better performing funds?
Arun Reddy, Hyderabad
Timing the exit from a fund that is losing on performance is important to cut your losses. The best way to exit is to cut your losses and invest in better performing funds. Your strategy to initiate STPs to better performing funds is not a bad idea, but remember that if the fund’s performance keeps deteriorating, you are only holding to a bad fund for longer and delaying the exit process from it, which is a losing proposition because of the opportunity loss that you face by not investing the redeemed sum into better performing funds.
