We know that (equity) mutual funds are meant for long term investment, say for 10-15 years. Now suppose I select some good fund with an aim to stay invested for 20 years. After 7 years the fund starts showing poor performance so I decide to exit the fund and invest the entire redeemed amount in another fund with approximately same return as the first one (at initial stage). This may happen because we can not predict the future performance of a fund precisely. Suppose the same happens with the second fund after 8 years and I switch to third fund with nearly the same return as previous one. After 20 years, will the gain from investment be different from what I expected from the first fund for the entire period? I think it will not because at each stage I have recovered the expected return from the fund I exit and invest the entire amount in the next fund. So even the compounding effect should remain same in both cases. Am I correct? What do you think?
Also what will be the tax implications of switching mutual fund? Will that affect gain?
Also what will be the tax implications of switching mutual fund? Will that affect gain?