Introduction
While your clients can invest in mutual funds on any business day, the NAV they get depends on the cut off time of a scheme. The cut off time differs across scheme categories – equity, debt and liquid funds. Let’s look at the cut off times of each scheme category:
Liquid funds (subscription)
- If the application is received up to 2 pm and the funds are received by the scheme before 2 pm, your client will get the previous day’s NAV
- If the application is received after 2 pm and funds are available for utilization on the same day, your client will get the same day’s NAV
Liquid schemes(redemption)
- If the application is received up to 3 pm, your clients will get the same day’s NAV
- If the application is received after 3 pm, your clients will get the next day’s NAV
Equity and Debt Schemes (subscription)
For amount less than Rs. 2 lakh
- If the application is received up to 3 pm, units are allotted on the same day’s NAV
- If the application is received after 3 pm, units are allotted on the next day’s NAV
For Rs. 2 lakh and above
- If the application is received up to 3 pm and funds are available for utilization before this cut off time, units are allotted on the day on which the application is received
- If the application is received after 3 pm and funds are available for utilization, units are allotted on the next day’s NAV
Equity and debt schemes (redemption)
- If the application is received up to 3 pm, units are allotted on the day of the application received
- If the application is received after 3 pm, units are allotted on the next business day
Since mutual funds are long term products, the NAV date doesn’t matter much if your clients are investing in equity funds. However, if your client is investing a large sum in liquid fund for a few days, a day’s difference would matter.
