Which service allows investors to switch between different mutual funds within the same family?

The option that allows investors to switch between different mutual funds within the same family is the exchange privilege. This service is commonly offered by mutual fund companies and enables investors to transfer their investments from one fund to another without incurring a sales charge, provided that both funds belong to the same family of funds. This is particularly useful for investors who want to adjust their asset allocation or take advantage of different investment opportunities without facing additional costs.

Exchange privileges can enhance an investor's flexibility, allowing them to reallocate their investments in response to changing market conditions or personal financial goals. This is a strategic feature that promotes a more dynamic management of an investor's portfolio, as opposed to remaining locked into a single investment choice.

In contrast, systematic withdrawal refers to a process where an investor regularly withdraws funds from an investment account, which does not involve switching funds. Automatic reinvestment pertains to reinvesting dividends or capital gains back into the same mutual fund rather than transferring to another one. A diversification strategy involves spreading investments across various assets to reduce risk, which is not specifically about switching funds within a family. Each of these alternatives serves different purposes in investment management but does not provide the capability to exchange funds as exchange privileges do.