In an informal guidance, SEBI has clarified that investors will be given Sunday’s NAV on liquid/overnight funds if they execute STP on Friday from liquid/overnight funds to other schemes.
For instance, if an investor switches out from liquid fund to invest in an equity fund on Friday i.e. a day prior to non-business day, he will be given NAV of Sunday as the money would be keep invested with the fund house because of non-business days. Also, he will get Monday’s NAV in the switch-in scheme i.e. equity fund in this example. This will be applicable irrespective of ticket size.
SEBI said, "As the NAV for the switch out transaction in a liquid scheme for the request received before the cut-of timing on Friday or on a day preceding the next business day, therefore, the NAV applicable for the coinciding switch-in transaction should not be prior to the day of NAV applicable for the switch out transaction. Therefore, in such case, the applicable NAV for the switch in transaction would be as per the applicable provisions, treating the switch in request as received on the day when NAV of switch out transaction is applicable.”
Remember, from January 1, 2021, investors will get NAV in mutual fund schemes on the day when the money reaches the fund house irrespective of ticket size and not on the day investors place the order. However, the regulation will not be applicable to liquid and overnight funds.
