What is the ideal time to exit a mutual fund scheme?

Mutual fund investment is part of most people's portfolio due to greater return it delivers on investment. However, it is important to understand for how long should you stay invested in a scheme. Picking the right fund may help investors grow their money faster. Investment experts advise investors to stay invested for longer period of time in case of equity mutual funds. On the other hand, debt mutual funds are for a shorter period of time. For the equity mutual funds, longer the duration the better. Investment experts normally advise investors to keep some small-cap and mid-cap exposure in their portfolio. However, many investors invest blindly not following these standard rules. A well-planned investment helps a person grow their money faster. Adopting the wrong method of investment may cause lower return. Therefore, to maximise their return, one should invest their money wisely.

Jitendra Solanki, a SEBI registered tax and investment expert, said one should stay invested in mutual fund until they fulfil their goals. They should reach close to their investment goals by choosing right kind of fund. "For short-term (up to three years), one should go for debt mutual fund. For three to five years period, a person should invest in mix (debt and equity) funds and beyond that they should go for equity funds," Solanki said. 

In the long-run (over  10 years), one should go for aggressive funds, with some exposure to small and medium caps for better returns. It also depends on the investors' risk appetite, he added. Conservative investors may go for hybrid funds which involve less risk.

Pankaj Mathpal, MD, Optima Money Manager, told Zee Business Online that for long-term investments one should take more exposure in equity mutual funds. As time horizon goes up, the exposure of small and medium-term should be increased to reap greater return. More is the invest horizon, there are chances of getting a better return. Therefore, one should take riskier funds for a better return in the long run.