For the past years I have considered selling the entire 'Growth' fund and buying immediately into the 'High Growth' fund.
I haven't triggered the switch yet because I worried this attitude was only due to the bull market.
Now we are a couple months into volatile bear market I am more sure of this decision, as well as my own risk tolerance.
What are the risks of this plan?
Capital gains tax will be minimised, as values at sale will be closer to purchase price than they would have been in January.
I am also in a position to tax deduct a lot this year, so will minimise the duties owed on this.
I'm looking for pitfalls to this plan.
With CGT minimised, the one other pitfall I can think of is that with some brokerage accounts you need to wait for settlement before buying again, so selling one day, waiting for a day or two for funds and having the stock market rise like 5% (or more) before you can buy again would really suck. Someone did that in the US and they lost 23k from it. I mean their portfolio was substantial so it's not like it was crippling but the guy's wife was understandably upset as she thought of all the things she could have bought with so much money.
If you were say moving from a high expense ratio managed fund into indexing but keeping your stock to bond allocation, you would move over bits at a time so you kind of average the differential, so day 1 you might sell then buy 4% up 2 days later, then on day 2 you might sell then buy 2% down 2 days later, and so on and so on, hopefully giving something a bit more even.
But since you're not selling and buying a similar asset allocation, i'm not sure if this works the same or not. I mean it would work for the total amount of equities at the start and the total amount of bonds at the end, but the bit in between where you will be switching from bonds to stocks, the longer you delay, the more you potentially drift from where you would be if you bought right now, and this comes back to the lump sum vs DCA issue.
Just off the top of my head, I might move it over in 5 bits. Still face the problem above where it moves up 5 days in a row, but at least you get a lower average spread between the selling and buying day than the single worst 2-day increase happening by moving it all in one go.