Legal Definitions - switching

SWITCHING

Switching refers to the practice of selling shares in one mutual fund to buy shares in another mutual fund.

For example, if an investor has invested in a technology mutual fund but wants to switch to a healthcare mutual fund, they would sell their shares in the technology fund and use the proceeds to buy shares in the healthcare fund.

Another example would be an investor who wants to switch from a growth mutual fund to an income mutual fund. They would sell their shares in the growth fund and use the proceeds to buy shares in the income fund.

Switching is a common practice among mutual fund investors who want to change their investment strategy or portfolio. By selling shares in one fund and buying shares in another, investors can adjust their portfolio to better align with their investment goals and risk tolerance.