A Switch is a transaction that moves money from one mutual fund scheme to another within the same fund house — it is treated as a redemption from the source and a fresh purchase in the target.
Switching is the process of shifting your investment from one scheme to another scheme within the same AMC. For example, moving from ICICI Prudential Liquid Fund to ICICI Prudential Bluechip Fund. Since both belong to the same AMC, the fund house handles the transfer internally. However, the switch is treated as a redemption from the source scheme and a fresh purchase in the target — meaning exit loads and capital gains tax from the source scheme apply.
A switch is like exchanging one dish for another at the same restaurant. You're staying with the same AMC but changing your scheme. Common use case: when your short-term goals are met and you want to shift from a debt fund to an equity fund, or as you approach retirement and want to shift from equity to debt. Switches are convenient but remember — the tax clock resets in the target fund.
Request a switch on the AMC's portal or app before cut-off time.
Units in the source scheme are redeemed at that day's NAV; units in the target scheme are purchased at the same day's NAV.
Exit load from the source scheme applies if within the load period.
Capital gains tax from the source scheme applies (STCG or LTCG based on fund type and holding period).
The purchase date in the target scheme is fresh — the holding period clock restarts.
After 3 years, your portfolio is 85% equity vs. 70% target. You switch ₹2 lakh from your equity fund to a debt fund within the same AMC. Equity gains above ₹1.25 lakh attract 12.5% LTCG tax. But the rebalance keeps your risk aligned with your goal.