Respuesta :
An exchange privilege. Exchange privilege is the right granted to shareholders of mutual funds to switch their investment from one fund to another within the same fund family.
Investors who use the exchange privilege within a fund family can adjust their investment strategy in accordance with the state of the market and typically benefit from the numerous funds provided by the mutual fund firm. There might be some exchange costs or capital gains taxes, though the former is often quite little. An investor can benefit from exchange advantages in numerous ways. For starters, the investor can employ rotating techniques that respond to market situations by using the exchange privilege. To protect capital and benefit from market movements that may present possibilities for capital appreciation, investors can rotate into and out of various funds using rotational techniques. Investors who are close to retiring can benefit from exchange rights in a different way. As retirement draws close, exchange privileges enable an investor to switch from higher-risk funds to more conservative funds. Do-it-yourself investors frequently use these tactics because they can cut some of the costs associated with full-service advisory services.
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