January 03, 2025
5 mins read
The cut-off timing in mutual funds is crucial because it decides which day’s NAV will be applied to your transaction. If you submit your request before the cut-off, the same day’s NAV is used, ensuring timely processing.
However, if the request is placed after the deadline, it is carried forward to the next business day. In that case, the NAV of the following day applies, which may vary based on market movements.
This difference can impact your returns, making it important for investors to always meet the deadline for accurate valuation and smoother transaction processing.
Mutual funds have a timeframe established by SEBI. Using the same day's NAV to make transactions keeps things fair and obvious for all investors.
The deadline for equity funds is normally 3:00 PM on business days. For debt funds, it could be different based on when the investor's account shows the money.
If investors finish their transactions before this cut-off, they can enjoy same-day NAV processing. This maintains the system working well and makes things obvious.
If you place a mutual fund transaction before the cut-off time, you will receive the NAV applicable for that same day. However, if your request is submitted after the cut-off, it will be processed with the next business day’s NAV.
For investments above ₹2 lakh, the NAV is applied only after the fund house confirms realisation of the money, ensuring fairness in allocation. In the case of liquid funds, units are allotted only when the money is actually credited into the fund’s bank account. Hence, having funds ready in advance is important to avoid delays in unit allocation.
The cut-off time differs based on the mutual fund transaction type: whether it is a purchase, redemption, or switch.
Type of Fund | Cut-off Time | What it means for you |
3:00 PM | If you place your request before 3:00 PM, you get the same day’s NAV. After 3:00 PM, it will be processed with the next business day’s NAV. | |
3:00 PM (only if money reaches fund house) | To get the same day’s NAV, make sure you invest before 3:00 PM and your money is credited to the fund house on time. Otherwise, the next day’s NAV will apply. | |
1:30 PM | For liquid funds, the deadline is earlier. Submit your request before 1:30 PM to get that day’s NAV. After 1:30 PM, it moves to the next day’s NAV. |
To make transactions easier and protect investors' interests, SEBI has come up with new rules for mutual fund cut-offs:
Same-day NAV for timely trades – All mutual fund transactions placed before the cut-off time are processed with the NAV of that day. Requests after the deadline are shifted to the next business day’s NAV.
High-value investments rule – For investments above ₹2 lakh, the NAV is applied only after the money is actually realised by the fund house, ensuring fair allocation.
Liquid fund condition – In liquid funds, units are allotted only when the investment amount is credited into the fund’s bank account, not just when the transaction request is submitted.
These steps boost transparency and safeguard investors.
It depends on the type of mutual fund, the amount, and the rules of the asset management business how long it takes for the money from a mutual fund redemption to get to your bank account. Weekends and holidays might also change how long it takes to process.
In general, it takes one to two business days to redeem cash and overnight money. A lot of investors use these items for short-term goals since they can earn their money back rapidly.
It takes longer for equity, debt, and hybrid funds, and the money usually shows up in your account within 2 to 4 business days. International funds can take even longer, up to eight business days.
SEBI placed these deadlines very close to the time when NAV stops being valid. Investors should always think about these times to make sure they can handle their money and plan their finances wisely.
The cut-off time is particularly critical for keeping the transaction process in order. It tells you the proper NAV for your investment or redemption, which has a direct effect on how much money you could make.
This is very important in markets that are unstable and where NAV could move a lot. The NAV also depends on whether or not the payments are actually received for transactions worth a lot of money.
If you follow these rules, you may get more out of your mutual fund investments. Knowing the right things can make sure that your transactions are handled well and honestly.
Missing the cut-off time – Submitting a transaction after the deadline means the next day’s NAV will be applied. This can affect expected returns, especially during volatile market conditions.
Not tracking performance – Failing to review your mutual fund’s progress regularly may lead to holding underperforming funds for too long, reducing potential returns.
Lack of diversification – Putting all your money into a single fund increases risk. A diversified portfolio helps balance returns and reduce losses.
Skipping SIP payments – Missing multiple SIP instalments may disrupt long-term goals, and repeated defaults can even lead to cancellation of your plan.
The Net Asset Value (NAV) is how much each share of a mutual fund is worth. To find it, you take the fund's entire assets, take away its debts, and then divide that sum by the number of units that are still available. This amount is figured up at the end of each trading day and is used to set the price for all mutual fund trades.
The cut-off time for the mutual fund tells you which NAV to use for your transaction. If you submit in your request before the deadline, you will get the NAV for that day. If you send in your request after the deadline, the transaction will use the NAV of the next business day.
When you switch funds, the cut-off time applies to both the redemption from the old fund and the purchase into the new fund. If you send in your request before the deadline, you'll get the NAV for both activities on the same day. But delays in fund realisation can have an impact on deals worth a lot of money.
Transaction Type | Fund Type | Cut-off Time | Applicable NAV Rule |
Purchase | Equity, Debt, Hybrid | 3:00 PM | Same day’s NAV, provided funds are realised before the cut-off. |
Liquid & Overnight | 1:30 PM | NAV of the previous business day, provided funds are realised before the cut-off. | |
Redemption | All Fund Types | 3:00 PM | Same day’s NAV, provided the request is submitted before the cut-off. |
Switch | All Fund Types | 3:00 PM | Same day’s NAV for both redemption and new purchase, provided funds are realised before the cut-off. |
You need to know what the mutual fund cut-off time is in order to get more of your investment strategy. Knowing these dates helps you make sure that your transactions are in line with your financial goals, which makes them as effective as possible.
If you keep to the cut-off timings, you can make informed selections that will directly effect your returns. This simple step makes sure that your assets are taken care of on time and in your interest.
No result found
The cut-off time for most mutual funds is 3:00 PM and for liquid funds, it is 1:30 PM.
All transactions, which are done before the cut-off time, are credited with the same day's NAV. Transactions made after the cut-off time are credited with the NAV of the next business day.
For equity and debt funds, the cut-off time is 3:00 PM, but for liquid funds, it is 1:30 PM.
It allows orderly processing and it specifies the NAV applicable to your transactions.
Yes, SEBI insists that cut-off timings should be uniform in all fund houses.
Yes, provided you close the trade by cut-off time and in line with the requirements of fund realization.
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes. The securities are quoted as an example and not as a recommendation. Past performance is not necessarily a guide to future performance.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
