Investments are for profitable returns and eventually to withdraw money. For mutual funds as well, an investor may have achieved the investment objective or may be dissatisfied with a particular fund for which they want to withdraw money. An investor will then redeem the shares held in the mutual fund to the fund company and receive the net asset value of those shares.

NAV is calculated after adding the market value of all the securities and is then divided by the number of shares that fund investors own. Funds consider either the closing or last sale price of the securities and the value of other investments in the portfolio. Following this, fees and expenses are deducted and then divided by the total number of shares outstanding. NAV is calculated after the closing bell of the stocks exchanges. So what an investor gets is the NAV value after it is being calculated following the close of market.

However, there are steps to follow for investor to withdraw mutual fund investments. Moreover, much like the Systematic Investment Plans (SIPs), investors can also avail the Systematic Withdrawal Plans (SWPs).

For selling a mutual fund, the investor will first contact the source where the fund shares are held. It can be with his broker, fund company or financial adviser. The sale order should be placed before the close of market, as the NAV will be calculated after the close of markets.

Instructions to sell the fund, or the portion to be sold, must be followed by directions on how the proceeds are to be collected by the investor. An investor can collect a check or transfer via wire, among other methods.

However, unlike stocks and bonds, check or wire transfers does not happen on the same day the mutual fund is sold.

Mutual funds can also be redeemed by an online procedure. For this, investor needs to know the mutual fund account number that will be available on the account statement. Investors with online access to the fund account can log in to the investment company or the bank’s website and click on his list of holdings. Thereafter, one will get the trading option, in this case to sell the desired fund. If an investor wants to withdraw only part of his holding from a fund, he will have to choose the dollar amount or percentage option.

Talking about the withdrawing portion of a fund holding, investors can also avail the SWP option, as mentioned earlier. Here, investors can withdraw money over a period of time, which can be monthly, quarterly or semi-annually. This process helps the investor counteract market volatility and not selling all holdings at a low price and availing the benefit of averaging.

However, while withdrawing money from mutual funds, there are certain charges or penalties that investors may have to bear. The charges may include sales load and 12-b1 fees among others. While selling a fund, investors may have to incur a Deferred Sales Charge (Load). These fees are deducted while redeeming fund shares. There may be funds that carry no sales load, but have 12-b1 fees. The 12b-1 fees are operational expenses and range from 0.25% to a maximum of 1% of the funds net asset. Funds may also charge redemption fees. It is different from sales load on the basis that it is not paid to a broker but is paid directly to the fund. It is the charge associated with the cost of redeeming funds. The SEC has set a 2% maximum ceiling on redemption fees.

Remember, multi-class mutual funds or different classes of shares (A, B, C, or I among others) carry different charges. Different share classes offer investors the varied fees and expense structure options. Investors would pick funds accordingly, depending on their investment goals. So, while A, B or C may attract retail investors, institutional class shares have fee and expense structure chalked out for institutions. (Read: Mutual Fund Classes: Learning A, B, C and I )

When to Withdraw Money

Understanding the right opportunity to sell a mutual fund will either get the investor a handsome return or stop losing further. Withdrawing the money therefore depends on fund performance.

If a fund is underperforming, investors may be tempted to offload the funds from their portfolio. Investors may also decide to sell a fund if the fund strategy changes. A change in the funds strategy may be one that does not match with investors financial goals. Often, a change in the fund manager leads to a change in strategy. So, investors need to keep track of the developments regarding the fund manager and fund strategy. There must be a re-evaluation and possibilities of a new strategy sounding less promising may be a reason to sell the mutual fund. (Read: When to SellYour Mutual Funds? )

2 Funds to Sell Now

Lets take a look at 2 mutual funds that we would recommend to sell. All these funds carry a ZacksMutual Fund Rank #5 (Strong Sell). Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.

Also, they carry a sales load, 12-b1 fees and redemption fees. These funds have negative returns year to date.

Calvert International Equity B (MUTF:CWVBX ) seeks high total return at par with reasonable risk. The fund invests the majority of its assets in non-US companies. The fund invests in companies that focus on corporate responsibility and sustainability challenges and reflect encouraging environmental, social and governance performance.

The fund has lost 6% year to date and carries a Zacks Mutual Fund Rank #5. The fund has a redemption fee of 2% and 12-b1 fees of 1%. It carries a max deferred sales load of 5%, higher than the category average of 2.72%. The fund also carries an annual expense ratio of 2.97% as compared to category average of 1.38%.

Fidelity Advisor Global Commodity Stock B (MUTF:FFGBX ) seeks growth of capital. The fund invests most of its assets in companies located across the globe. These companies belong to energy, metals and agriculture industries. The fund uses fundamental analysis and also looks into market and economic conditions for investing.

The fund has lost 5.5% year to date and carries a Zacks Mutual Fund Rank #5. The fund has a redemption fee of 1% and 12-b1 fees of 1%. It carries a max deferred sales load of 5%, higher than the category average of 1.89%. The fund also carries an annual expense ratio of 2.1% as compared to category average of 1.47%.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the ZacksMutual Fund Rank in our Mutual Fund Center .

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