Follow these four steps to sell the units you own in a mutual fund:
1. Contact the adviser who sold you the fund, or someone in their company. If you bought directly from a mutual fund dealer, contact the company directly.
2. Tell them that you want to sell your units. The value of a mutual fund unit is described as the net asset value per share (NAVPS). Here is how you calculate the NAVPS:
- First, take the total value of the fund if everything were sold on that day, less any outstanding debts.
- Divide that total value by the total number of units that the fund has sold to investors Example: If a fund is worth $10 million and has sold one million units, the NAVPS will be $10. If you own 10 units, your investment is worth $100.
3. You may have to sign a form stating that you want to sell your units. This stops anyone from selling your units when you don?t want them to. For example, if you give the order to sell the units over the phone, you may be asked to fax a confirming letter.
4. Tell your adviser or the mutual fund company what you want them to do with the money you get from the sale. Options include: sending you a cheque, depositing the money in your bank account, or using the money to buy other mutual funds.
Tip: If you want to move your money to another fund in the same mutual fund company, you can usually do a simple exchange. Tell your adviser if you want to do this. It may save you some time and money.
Will I pay any costs when I sell my mutual funds? The answer is "yes" if you bought a mutual fund with a deferred sales charge. In this case, you will pay a sales fee or commission. The size of the fee depends in part on how long you have held the funds, and what company you are dealing with.
Tip: Most companies allow you to sell a certain number of units (say, 10%) for free each year.
Remember: You may pay fees to sell your mutual fund units
Find out how much before you decide to sell. Another option is to switch to another mutual fund from the same company. If it's a good fund, it may be a good move and it will save you money.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.