Mutual Fund Cut-Off Timings That You Must Remember

As you know, when you buy or sell shares, the price/share that you get is... as quoted at that very moment.

But, when you buy or sell mutual funds (excluding ETFs), the price/unit is... as valued at the end of day.

The key question however is, which end of day... yesterday, today or tomorrow?

Answer: All the three possibilities exist.

Depending on the
1. Amount you propose to invest,
2. Type of fund you are buying / selling, AND
3. Exact time of the day when you submit your purchase / redemption request,
will determine, which particular day's price/unit i.e. NAV (Net Asset Value) will apply.

The exact time of your request is important because, mutual fund rules and regulations specify, what is known as the "Cut-Off Time".

Here's the brief overview of Mutual Fund Cut-Off Timings as applicable on Purchase, Sale or Switch of mutual funds units.

The cut-off timing rules can broadly be divided into three categories:
a) All Schemes except Liquid Funds (Amount less than Rs.2 lakhs)
b) All Schemes except Liquid Funds (Amount Rs.2 lakhs or more)
c) Liquid Funds (Any amount)

A. ALL SCHEMES except Liquid Funds (Amount less than Rs.2 lakhs)

Fresh Investment or Switch-In
You will be allotted units at TODAY's net asset value if
(a) your application for investment is submitted BEFORE 3:00 PM, along with the
(b) local cheque or payable-at-par demand draft.

You will be allotted units at TOMORROW's net asset value if
(a) your application for investment is submitted AFTER 3:00 PM, along with the
(b) local cheque or payable-at-par demand draft.

Important: For outstation cheques and demand drafts not payable-at-par, the NAV applicable would be of the SAME day when the cheque / draft gets credited to the MF's bank account.

Redemption
You will be allotted units at TODAY's net asset value if your request for redemption is submitted BEFORE 3:00 PM.

You will be allotted units at TOMORROW's net asset value if your request for redemption is submitted AFTER 3:00 PM.

Time is Money. Don't miss the deadline for submitting your mutual fund application.

B. ALL SCHEMES except Liquid Funds (Amount Rs.2 lakhs or more)

Fresh Investment
You will be allotted units at TODAY's net asset value if
(a) your application for investment is submitted BEFORE 3:00 PM, PLUS
(b) the funds are credited to the MF's bank account and available for it to utilize the same day.

You will be allotted units at TOMORROW's net asset value if
(a) your application for investment is submitted AFTER 3:00 PM, and
(b) the funds are credited to the MF's bank account and available for utilization tomorrow.

Important: What if the funds are not available with the Mutual Fund for utilization before the cut-off time? In such instances, the units will be allotted as per the NAV of the SAME day on which the funds are available for utilization (irrespective of the time of the application.)

Switch-In
Where the application is received "before" the cut-off time and the funds are available for utilization before the cut-off time, TODAY's NAV will apply.

Where the application is received "after" the cut-off time, TOMORROW's NAV will apply even if the funds are available for utilization today.

Redemption
You will be allotted units at TODAY's net asset value if your request for redemption is submitted BEFORE 3:00 PM.

You will be allotted units at TOMORROW's net asset value if your request for redemption is submitted AFTER 3:00 PM.

C. LIQUID FUNDS (Any Amount)

Fresh Investment
You will be allotted units at YESTERDAY's net asset value if
(a) your application for investment in a Liquid Fund is submitted BEFORE 2:00 PM, PLUS
(b) the funds are credited to the MF's bank account and available for it to utilize the same day.

[Note: This is the only case where you are eligible for previous day's NAV.]

You will be allotted units at TODAY's net asset value if
(a) your application for investment in a Liquid Fund is submitted AFTER 2:00 PM, and
(b) the funds are credited to the MF's bank account and available for utilization on the same day.

Important: What if the funds are not available with the Mutual Fund for utilization before the cut-off time? In such instances, the units will be allotted as per the NAV of the day, PRIOR to the day when the funds become available for utilization (irrespective of the time of the application.)

Switch-In
The same terms will apply also on the requests for Switch-In from Other Funds to the Liquid Funds.

Redemption
You will be allotted units at TODAY's net asset value if your request for redemption is submitted BEFORE 3:00 PM.

You will be allotted units at TOMORROW's net asset value if your request for redemption is submitted AFTER 3:00 PM.


IMP: Investment thru' Online facilities / Electronic Modes

• The time of receipt of the application on the MF's server, would be considered as the 'time of application' for the Cut-Off Timing purposes;
• Online transfer of money can take even up to 5-7 days. As such, the day of NAV will be determined based on the day of actual realization of money by the Scheme (and not the day when your account is debited). 

THIS IS MOST IMPORTANT
The cut-off times mentioned above are the time when the Mutual Funds receive the application at their Designated Places.

If you are going through a distributor or an agent, then each distributor / agent will have their own cut-off times. Naturally. They need some time to process your application at their end, before they can go and submit the same at the Designated Place of the particular Mutual Fund.

Therefore, in such cases, your "distributor's / agent's" cut-off time is more relevant than the Mutual Fund's cut-off time.

[Note: For simplicity, I have assumed that all the days are Business Days. If not, the applicable day for NAV will change accordingly.]