Oct 09, 2018 | Source: economictimes.indiatimes.com
Mutual Fund Redemption
The process is easy, and depending on the type of mutual fund you hold, money can be credited to your bank account in a maximum of 4-5 working days after you submit a redemption request to the fund house.
How does an investor redeem mutual fund units?
A unit of a mutual funds can be redeemed on any business day. In the physical mode, investors need to fill in the requisite transaction slip, which can be download from the fund house website or detach from the bottom of your account statement. The redemption application can be submitted at the fund house office or any of the official points of acceptance of transactions, across the country. Many fund houses also allow online redemptions, through their websites. If you have invested through an online portal you could redeem your mutual fund units online as well.
How do I know what is the amount that will be credited?
It is easy to calculate the approximate value of your investments. It can be done by multiplying the number of units you hold on the day with that day’s NAV of that particular scheme. However it will be subject to
a) exit load, if any for the scheme and
b) ‘applicable NAV’ i.e., the NAV that depends on the day and time when that you submit your redemption request. For example if you are submitting your redemption before the cut-off time on a business day you are entitled to the NAV of the same day. Do note that securities transaction tax (STT) is applicable on redemption of equity-oriented schemes
Redemption proceeds for liquid or debt-oriented units are paid within 1-2 working days. For equity mutual funds, the amount is credited within 4-5 working days. The redemption proceeds are paid to the investor’s registered bank account provided that the bank branch is enabled for RTGS / NEFT. If the fund house, does not have complete bank details, cheques are sent to the investor.
What load or charges will the investor have to pay on redemption?
Generally most equity-oriented schemes have an exit load of 1% if redeemed before a year from purchase. There are some schemes which have Liquid or ultra short-term funds do not have any exit load. So, if you hold an equity mutual fund and you wish to redeem before a year, an exit load, will be deducted from the NAV which is applied for your redemption per unit.