Switching

DEFINITION of 'Switching'

1. In mutual funds, the process of transferring an investment from one fund to another.

2. In securities, the process of liquidating a position in exchange for other securities with better prospects for growth, yields or capital gains.

BREAKING DOWN 'Switching'

1. Investors may switch their assets between funds in the same family or into a different family entirely. Generally, no-load funds do not charge for these transactions. However, some brokerages may charge a commission.

2. When investors switch securities, they essentially use the cash received from the liquidation of their initial securities to purchase new securities.

In futures, an investor will switch futures contracts by closing an open position and simultaneously entering a new, similar futures contract with a longer maturity.

RELATED TERMS
  1. Exchange Privilege

    The opportunity given to mutual fund shareholders to exchange ...
  2. Fund Supermarkets

    An investment firm or brokerage that offers investors a wide ...
  3. New Fund Offer - NFO

    A security offering in which investors may purchase units of ...
  4. No-Load Fund

    A mutual fund in which shares are sold without a commission or ...
  5. Money Market Fund

    An investment fund that holds the objective to earn interest ...
  6. Mutual Fund Custodian

    A trust company, bank or similar financial institution responsible ...
Related Articles
  1. Investing

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  2. ETFs & Mutual Funds

    Introduction To Money Market Mutual Funds

    Learn about the easiest way to benefit from money market securities.
  3. ETFs & Mutual Funds

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  4. ETFs & Mutual Funds

    ETFs vs. Mutual Funds: How Investors Can Choose

    While ETFs and mutual funds are fundamentally different, they also provide many of the same benefits. Here's how to choose between the two.
  5. ETFs & Mutual Funds

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
  6. ETFs & Mutual Funds

    Mutual Funds Are Awesome - Except When They're Not

    This investment is very popular, but that doesn't mean it comes without risk.
  7. ETFs & Mutual Funds

    Mutual Funds

    What mutual funds are: Professionally managed pools of stocks, bonds and/or other instruments that are divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  8. ETFs & Mutual Funds

    A Mutual Funds Guide for Young Investors

    Learn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
  9. Managing Wealth

    Mutual Funds: What Are They?

    The Definition A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money ...
  10. ETFs & Mutual Funds

    How liquid are Fidelity mutual funds?

    Review the liquidity features of mutual fund shares and an overview of Fidelity mutual funds. Most investors look for convenient access to their investments.
RELATED FAQS
  1. Can I transfer Class A shares of one fund into Class A shares of another without ...

  2. How do no-load funds typically perform relative to load funds?

    Understand the difference between no-load mutual funds and funds that carry a sales load, and learn which of the two has ... Read Answer >>
  3. What are the characteristics of a marketable security?

    Find out what it takes for a financial asset to be considered a marketable security, including its liquidity, intent of use ... Read Answer >>
  4. Are mutual funds considered equity securities?

    Find out why mutual funds, like stocks, are equity securities, including the similarities and differences between investing ... Read Answer >>
  5. Does it make sense for me to have a money market account if I don't want to buy any ...

    Saving funds within a money market account or mutual fund does not have to be limited to those wanting to buy or sell securities ... Read Answer >>
  6. Does OptionsHouse have mutual funds?

    Learn about how investors can buy shares in mutual funds through OptionsHouse. Read how investors need to call the brokerage ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center