Exchange Privilege

AAA

DEFINITION of 'Exchange Privilege'

The opportunity given to mutual fund shareholders to exchange their investment in a fund for another within the same fund family at no additional cost. This privilege allows investors to switch funds when market conditions change.

INVESTOPEDIA EXPLAINS 'Exchange Privilege'

For example, you might want to be in an aggressive growth fund when the market is going up, but when the markets start heading downward, you may switch to a bond fund.

There is usually a limit to how many times an investor can switch funds within a year.

RELATED TERMS
  1. Back-End Load

    A fee (sales charge or load) that investors pay when selling ...
  2. Growth Fund

    A diversified portfolio of stocks that has capital appreciation ...
  3. Load Fund

    A mutual fund that comes with a sales charge or commission. The ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. No-Load Fund

    A mutual fund in which shares are sold without a commission or ...
  6. Switching

    1. In mutual funds, the process of transferring an investment ...
Related Articles
  1. When To Sell A Mutual Fund
    Mutual Funds & ETFs

    When To Sell A Mutual Fund

  2. Mutual Fund Tune-Up Delivers High-Powered ...
    Mutual Funds & ETFs

    Mutual Fund Tune-Up Delivers High-Powered ...

  3. Market Cycles: The Key To Maximum Returns
    Active Trading

    Market Cycles: The Key To Maximum Returns

  4. Mutual Fund Basics Tutorial
    Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center