(1) When the mutual fund consistently under performs the broad based index, it is high time that it should get out of the scheme. It would be better to invest in the index itself either by investing in the constituents of the index or by buying into an index fund.
(2) When the mutual fund consistently under performs its peer group instead of it being at the top. In such a case, it would have to pay to get out of the scheme and then invest in the winning schemes.
(3) When the mutual fund changes its objectives e.g. instead of providing a regular income to the investor, the composition of the portfolio has changed to a growth fund mode which is not in tune with the investor’s risk preferences.
(4) When the investor changes his objective of investing in a mutual fund which no longer is beneficial to him.
(5) When the fund manager, handling the mutual fund schemes, has been replaced by a new entrant whose image is not known.
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