20 Mar, 2025
4 mins read
Investing in mutual funds helps build wealth over time. Mutual fund investments come with specific deadlines known as cut-off times, which determine the price at which your purchase or redemption order gets executed. Whether you’re investing in equity, debt, or liquid funds, understanding these cut-off times is crucial for efficient financial planning. Missing the deadline can impact the Net Asset Value (NAV) you receive, affecting your returns. In this guide, we’ll break down the mutual fund cut-off times, their importance, and how they influence your investment transactions, ensuring you make informed decisions.
The mutual fund cut-off time is the deadline for submitting transaction requests to get the same day's Net Asset Value (NAV). The request could either be a request for the purchase of new units, switch-in from other schemes or redemption of your existing units.
If you submit after this time, your request is processed at the next business day's NAV. These cut-off times are set by SEBI and vary depending upon the category of the fund but are uniform across all fund houses. The cut-off time for buying or switching in for liquid and overnight funds is earlier in the day at 1;30 pm and for all other mutual funds, it is at 3 pm. For redemption, the cut-off time is 3 pm for all categories of mutual funds.
You should note that weekends and holidays are non-business days for mutual fund transactions.
Cut-off times affect how your transactions process. Understanding the cut-off time for mutual fund NAV is essential for investors planning their purchases and redemption. If you submit a purchase request before 3:00 PM, you receive units at the NAV of the same day (except for liquid and overnight funds). If you submit after this time, you get units at the NAV calculated on the next business day.
Below is an example of how cut-off time affects your investment.
Assume a mutual fund's NAV is ₹125:
If you submit a purchase request for an amount of Rs 10000 before 3:00 PM in an equity fund, you get them at ₹125 per unit, which means you get 80 units of the mutual fund. However, if you submit after 3:00 PM and the next day’s NAV is ₹130, you get 77 units of the mutual fund.
This shows why knowing the cut-off time matters – it can save you money on your investments.
SEBI has clear rules about mutual fund cut-off times for fair transactions. Key points include:
Cut-Off Timings: Different funds have specific times. Liquid funds have a 1:30 PM cut-off for buying while selling remains at 3:00 PM.
Systematic Investment Plans (SIPs): Cut-off times apply to both lump sum investments and SIPs. If your SIP processes before 3:00 PM, it gets that day's NAV.
Different funds have different cut-off times. From 01 February 2021, there are the standard times for cut-off as per SEBI regulations:
|
Fund Category |
Cut off time |
|---|---|
|
Liquid & Overnight Funds (Subscription including switch-in from other funds) |
1:30 pm |
|
Liquid & Overnight Funds (Redemption including switch-in from other funds) |
3:00 pm |
|
All other funds (Subscription including switch-in from other funds ) |
3:00 pm |
|
All other funds (Redemption including switch-in from other funds) |
3:00 pm |
Source: AMFI
Getting the same-day NAV can impact your returns significantly. In volatile markets, small NAV changes can mean a difference in the number of units you get for your investment.
To get the same-day NAV, your transaction must be processed before the cut-off time. This means your purchase or redemption request needs to reach the fund house's system before the deadline. Your bank transfer should also be complete and confirmed. When you invest through online platforms, the timestamp of your completed transaction matters.
Cut-off times for mutual fund transactions play a vital role in your investment strategy:
Timely Investments: Submitting before cut-off lets you benefit from current market conditions.
Accurate Planning: You can align your transactions with market trends by understanding cut-off times.
Liquidity Management: For liquid funds, following cut-off times helps you manage short-term cash needs effectively.
Understanding mutual fund cut-off timings determines if your transaction gets same-day NAV or not. By following SEBI guidelines and knowing specific cut-off times for different funds, you can maximise returns and make smarter investment decisions. Whether you're putting money in equity or liquid funds, awareness of these details can greatly improve your investment experience.
For equity, debt, and hybrid mutual fund schemes, transactions must be completed by 3:00 PM on business days to receive same-day processing. Liquid and Overnight funds operate on a stricter timeline, with a 1:30 PM cut-off threshold for purchase and switch-in from other funds.
Transactions received after the established cut-off period will be processed using the Net Asset Value determined on the following business day. This timing difference can significantly impact investment returns during periods of market volatility.
Systematic Investment Plans (SIPs) adhere to identical cut-off parameters as one-time investments. The fund must receive your scheduled contribution before the designated cut-off hour on your SIP date to apply the current day's valuation; otherwise, subsequent business day calculations will govern your transaction.
Financial institutions suspend mutual fund processing during weekends and recognized holidays. Any transactions initiated during these non-operational periods automatically transfer to the next available business day for processing, consequently affecting your NAV allocation.
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