What Are the Benefits of Switching Mutual Funds on Pluang?

The main benefit of switching mutual funds is that you can adjust your portfolio to changing market conditions by moving your balance from one fund to another under the same investment manager, without selling first. When the stock market is bullish (tending to rise), you can switch from a money market fund to an equity fund to try to take advantage of the momentum. When the market is bearish (tending to fall), you can switch from an equity fund to a money market fund, which carries lower risk, to help avoid larger losses. On Pluang, switching is also free, with no switching fee, and a switch is completed within a maximum of 2 business days. Switching does not guarantee a profit or protect you from losses: the value of any mutual fund can still go down, and past performance does not guarantee future results.

Benefits of switching:

• Respond to a rising market: When the stock market is bullish, you can move your balance from a money market fund to an equity fund to try to benefit from the momentum of a volatile market.
• Lower your risk in a falling market: When the market is bearish, you can move from an equity fund to a money market fund, which carries lower risk, to help avoid large losses.
• No switching fee: Switching is free on Pluang.
• One transaction instead of two: Your balance moves directly into the target fund, so you do not have to sell, wait for the proceeds to reach your registered bank account (up to 7 business days), and then pay for a new purchase. A switch takes a maximum of 2 business days.

Rules that still apply:

• Both funds must be managed by the same investment manager, and some funds cannot be switched even within the same investment manager.
• You can switch into money market, fixed income, equity and balanced funds; USD mutual funds cannot be switched yet.
• The amount must be at least 105% of the target fund's minimum purchase or minimum ownership, and only Available Units can be switched.
• The cut-off time is 13:00 WIB, the same as for buying and selling mutual funds.

Related questions:

Q: Does switching mutual funds guarantee better returns?
No. The benefit of switching mutual funds is flexibility over where your money sits, not a guaranteed result: switching changes which fund your money is in, but it does not guarantee a profit or protect you from losses. An equity fund can fall after you switch into it, and moving to a money market fund lowers your risk but does not remove it. Before switching, read the target fund's prospectus and fund fact sheet, which you can find at the bottom of the fund's asset page in the Pluang app.

Q: When would someone switch from an equity fund to a money market fund?
Typically when the market is bearish, meaning prices are tending to fall. A money market fund carries lower risk than an equity fund, so switching into one can help avoid large losses during a downturn. The decision is yours to make based on your own goals and risk profile; Pluang does not tell you when to switch.

Q: Are there limits on switching mutual funds?
Yes. You can only switch between funds from the same investment manager, into money market, fixed income, equity or balanced funds, and USD mutual funds cannot be switched yet. The switch must be at least 105% of the target fund's minimum purchase or minimum ownership, only Available Units count, and a partial switch is not allowed if the balance left in your original fund would fall below its maximum partial switching amount, which works as a minimum remaining balance.

Q: Is switching mutual funds free on Pluang?
Yes. There is no switching fee on Pluang, so moving between funds from the same investment manager costs you nothing extra. The costs borne by each mutual fund product are separate from switching: they are already included in the fund's NAV and listed in its prospectus and fund fact sheet.