How to transfer an investment fund?

What is a transfer of funds?

A transfer between investment funds consists of repaying all or part of the shares of one investment fund in order to subscribe simultaneously to that amount in a different investment fund. These transfers between funds have the advantage that it is not necessary to pay tax on the capital gains generated.

How long does it take to transfer funds?

Transfers can take place between funds of the same manager or between funds of different managers. The first case is the simplest, as the destination entity and the origin entity are the same, which simplifies the verification procedures. The participant has to go to the entity and request a transfer between the two investment funds, indicating the amount and number of shares he wishes to transfer. Within a maximum of five working days, the investment in the target fund should materialize.

When the funds are from different fund managers, the procedure is more expensive, and normally lasts approximately eight working days. This figure is a reference, as many times it also comes into play when we make the request and the time from which the manager stops processing transfers. There are some slower managers for this type of process, but it does not usually exceed to a great extent the 8 working days.

How are transfers of funds carried out?

The investor will have to contact the entity of the destination, indicating the fund of origin that wishes to transfer and the amount of the same or number of units.

This entity must send the request to the entity of origin, which may carry out the verifications it deems appropriate.

Subsequently, the entity of origin will have to carry out the reimbursement of the requested capital, sending this amount and the tax information of the investor.

Finally, when the assets arrive at the target entity, the new fund is immediately subscribed.

Do you tax transfers of funds?

At the moment of the transfer, the holder cannot dispose of this amount, only some shares are exchanged for others, therefore, no type of taxation is generated.

For tax purposes, the value and age of the first investment is retained, as a result of which the capital gains are not taxed until they are definitively repaid.
This regime applies to both Spanish funds and Community funds registered with the CNMV. ETFs or listed funds are excluded from these tax advantages. This is one of the advantages that index funds have over ETFs, the most favourable taxation, as we can adapt the payment of taxes to our needs.
What is the cost of transfers of funds?

Directly, there is no cost for the transfer. However, indirectly, the transfer involves a cost for the redemption and subscription fee of the new fund. Some brokers charge a fixed minimum fee for subscribing new funds, but this depends a lot on each broker and the transfer style. The ideal thing is to be well informed about this aspect, and to make sure if they charge between steps of funds between national managers or from national to international, lest we get a scare when remaking our portfolio.

Conclusions

The transfer is a simple process, where we only have to have clear the amount we want to transfer and where, and the broker where we operate will be responsible for making the rest of necessary transactions. The time between transfers is indeterminate, but does not usually exceed 8 working days. Before deciding on a broker, it is important to ask if they have commissions to process transfers between investment funds.

 

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