The Money Vault – Fund switch checklist

Listen to The Money Vault - Fund switch checklist

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Summary:

I discuss the critical last-minute checks required before making a fund switch within your investment portfolio. I explain how you can identify hidden costs like bid-offer spreads and why comparing different share classes is essential to ensure you are buying the right product. I also highlight the importance of reviewing a fund's asset mix, its performance during market downturns, and how checking the latest news can protect your capital from unforeseen issues.

Key insights

• Understand the charges and process - When moving from a unit trust to an ETF, you usually need to sell your current holdings to cash before purchasing the new ETF, which may incur transaction fees.
• Watch out for the bid-offer spread - Some funds have different buying and selling prices, acting as an entry fee; always check both prices to see if you are paying an extra percentage.
• Verify the share class and type: Funds often have multiple versions, such as hedged versus unhedged or income versus accumulation. Chart and compare them to ensure you buy the exact version you need.
• Look beyond the fund name - A fund's title might not fully reflect its holdings; for example, an 'Asian equity' fund could be heavily concentrated in a single market like China, altering your portfolio's risk profile.
• Timing is everything - Platforms and individual funds have specific daily cutoff times for trading (often in the morning). Placing your switch early ensures you know the price point and minimizes the time your money is out of the market.
• Check the news - A quick search of the fund's name in a news search engine can reveal crucial information, such as a manager's departure or impending fund closure, before you commit your money.

• Resources

• Links referred to in the podcast:
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• Trustnet
• Best and Cheapest Fund Platform