Withdrawing: the mechanics
You submit a redemption request with your manager or platform. Units are redeemed at the next calculated unit price — not the price you saw when you clicked — and proceeds typically settle within a few business days (each fund's PDS states its processing terms). If the fund charges a sell spread, it comes off the unit price at that point; it is a one-off cost paid into the fund, not a penalty. Partial withdrawals are standard, and many income-oriented funds also support regular withdrawal plans that automate a monthly payment.
Switching within one manager
Moving between funds in the same manager's range — say conservative to balanced — is usually a single switch instruction: the manager redeems one fund and issues the other, often on the same valuation cycle, so out-of-market time is minimal. Spreads still apply per fund where disclosed. This is the cheapest, fastest kind of switch, which is worth knowing before assuming a whole-of-market move is necessary.
Switching between managers
Across managers it is genuinely two steps: redeem with manager A (settlement days), then apply with manager B (application processing, and AML checks if you are a new customer there). Expect several business days out of the market in between — markets can move in that window, in either direction. Platforms shorten this operationally when both funds sit on the same platform, but the redeem-then-buy sequence and its timing gap still exist.
Tax when you exit a PIE
On full withdrawal from a PIE fund, the fund calculates the tax on your attributed income at your PIR up to the exit date and deducts it from your proceeds — that is the tax event. There is no separate NZ capital-gains bill on redeeming units. If your PIR was set too low along the way, IRD squares up the difference in your end-of-year assessment; too high and recent rules refund the overpayment. Keep your PIR current before large withdrawals rather than after.
The small print worth reading first
Three PDS clauses matter at exit: spreads (what the sell side costs today — spreads can be updated), suspension and deferral rights (funds can delay redemptions in stressed or illiquid markets — rare, but it is the clause that bites at the worst time), and minimum balance rules (a partial withdrawal that drops you below the minimum may be treated as a full exit). None of these are hidden; all are in the fund's current PDS, linked from every fund page on this site.
Before you switch: a mechanical checklist
Compare the annual fund charge delta against the switching cost (both funds' spreads plus days out of market). Confirm the new fund's risk indicator matches your intent — accidental de-risking after a bad year is the most common self-inflicted switch. And judge the old fund on its multi-year record against its own index, not one year: the consistency pages on this site exist for exactly that check.