Mutual Funds

All you need to know about redemption in a mutual fund

Mutual funds are one of the most liquid products and hence a preferred choice for many investors. Depending on the type of mutual fund one holds, money can come back into the investor’s bank account within just four working days of making a redemption request to the fund house.

How do you sell or redeem mutual fund units?
The mutual fund units you hold in an open-end mutual fund scheme can be sold partially or fully. A request can be submitted to the fund house on any business day. If you want to do it in the physical mode, fill in the requisite transaction slip, which can be downloaded 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. However, the most convenient way is to make this redemption request online through the fund house website or app. Requests can also be made online through the registrar or through any other third-party online portal.

Once I redeem, how do I calculate what is the amount that will come to me?
The amount that will come to your account is the number of units you hold on the day multiplied with the day’s NAV of that particular scheme. However, it will be subject to any exit load that is levied by the scheme.

What load or charges will the investor have to pay on redemption of units?
Generally, most active equity-oriented mutual fund schemes have an exit load of 1% if redeemed before a year from purchase. There are some schemes which have liquid or ultrashort term funds that 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.

How long does it take to get redemption proceeds in a bank account?
Redemption proceeds for liquid or debt-oriented units are paid within one/two working days. For equity mutual funds, units are redeemed and the amount is paid back to investors typically on the fourth working day. The redemption proceeds are paid to the investors bank account directly.

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button