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. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  4. Family Of Funds

    A group of mutual funds offered by one investment or fund company. ...
  5. Capital Gains Distribution

    The payment of proceeds prompted by a fund manager's liquidation ...
  6. World Fund

    A mutual fund that invests in securities from several different ...
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. Mutual Funds & ETFs

    Introduction To Money Market Mutual Funds

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

    No Load Vs. Index Fund: Is One Better Than the Other?

    Find out how no-load funds, index mutual funds and ETFs can help investors boost returns just by cutting down on expenses and sales charges.
  4. Mutual Funds & ETFs

    Mutual Funds

    Mutual Funds introduction
  5. Mutual Funds & ETFs

    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.
  6. Retirement

    Analyzing The Best Retirement Plans And Investment Options: Mutual Funds

    What they are: A professionally managed pool of stocks, bonds and/or other instruments that is divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  7. Mutual Funds & ETFs

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  8. Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

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

    Mutual Funds Are Awesome - Except When They're Not

    This investment is very popular, but that doesn't mean it comes without risk.
  10. Options & Futures

    Overview Of Mutual Fund Expenses

    By Richard Loth (Contact | Biography)"In the mutual fund field, costs assume a tremendous importance for the long-term investor. Other things held equal, lower costs mean higher returns." -John ...
RELATED FAQS
  1. Are mutual funds considered liquid assets?

    Find out why mutual funds are considered liquid assets, including the basics of how mutual funds work and how the liquidity ... Read Answer >>
  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. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
  4. How liquid are Vanguard mutual funds?

    Learn how liquidity applies to the Vanguard mutual fund family. Vanguard is one of the most well-known and largest investment ... Read Answer >>
  5. 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 >>
  6. Is it better to buy A-shares or a no-load mutual fund?

    Understand the difference between Class A mutual funds and no-load funds, and learn which option for mutual fund investing ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center