Cut-off time for Investment

Not many people know that mutual funds have an official cut-off time for investments and redemption. The cut-off time is not to restrict the purchases and selling. It determines what Net Asset Value (NAV) one gets to buy or sell units of your mutual fund scheme. To put it simply, the allotment of NAV depends on the time when the application is submitted and money with the fund house. This time is called cut-off time in the mutual fund world.

There are different cut-off timings for liquid, debt and equity funds. A person can be allotted the NAV of the same day, the previous day or the next day according to the time of submission of application and funds.

The cut-off time is 2 pm for liquid funds. If the investment occurs before 2 pm in a liquid fund, one will be allotted units at the NAV of the previous day. This will happen only if the funds are transferred before the cut-off time. If the cut-off time is missed and the submission of  application and funds occur after 2 pm, one will be allotted units at the NAV of the same day. Even if the application is submitted before 2 pm, but the money is not transferred before the cut-off time, one will not be eligible for the previous day's NAV.

The cut-off time for equity and other debt funds is 3 pm. If the investor submits the application before 3 pm, he/she will get the same day's NAV. Submitting the application after the cut-off time will get the next day's NAV. Unlike liquid funds, one does not need to transfer the funds before the cut-off time.

If the investment is more than Rs 2 lakh, one needs to ensure that the funds and the application form are submitted with the mutual fund house before the cut-off time. Even if the application is submitted before the cut-off time, the cut-off timing rules will be applicable on the basis of when the amount gets deposited.

Should one worry about cut-off -time?

The investments for long time frame do not get affected with cut-off timings but they do matter if the investment amount is very high. Cedrus Wealth Partners is led by an experienced and knowledgeable leadership that would solve this worries about the cut-off timings. To resolve your wealth management issues and to know more, contact Cedrus Wealth Partners today!

Keep reading, subscribe and share our resourceful blogs.