The new fund has to be a lot better. Not a little.
That 3.6 percent is a head start you hand the fund you are leaving, every single time you leave it. A one or two point edge does not clear it. And it has to keep clearing it.
01
A switch is a taxable event the market never billed you for. Selling to move resets your cost basis and hands over a slice of a gain that was still compounding for you.
02
The code rewards sitting still. Inside a year it is 20 percent plus a likely load. Past a year, 12.5 percent with the first 1.25 lakh exempt. Same fund, a fraction of the bill, for doing nothing.
03
Inside one fund the manager's own churn costs you no tax. The only trade that sends a bill is you deciding to jump. Chasing last year's winner is you volunteering to pay it.
Staying put is not laziness. It is the one free deferral the tax code hands a fund investor, and every switch tears it up. Make the new fund earn the toll before you pay it.
See your funds lined up on the same footing.
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