What are cut-off timings in mutual funds?

Nutan Gupta

30 May 2017

New Page 1

A lot of people would be unaware of the fact that mutual funds have cut-off timings. No, the cut-off time doesn’t mean that it will restrict your purchases and redemptions. The cut-off time determines the NAV (Net Asset Value) you get when you buy or sell a particular mutual fund scheme. An individual is allotted the NAV depending on the time he submits his application and money with the fund house. This time is known as the cut-off time in a mutual fund.

Liquid, debt and equity funds have different cut-off timings. An individual can be allotted NAV of the same day, previous day or even the next day based on the time he submits his application and money. The cut-off time for liquid funds is 2 pm. If an individual invests before 2 pm, he will be allotted mutual fund units at the NAV of the previous day. However, if an individual fails to transfer the funds before 2 pm, he will be allotted units at the NAV of the same day, irrespective of the time of submitting the application.

As far as equity and debt funds are concerned, the cut-off time is 3 pm. If an individual submits the application before 3 pm, he will be allotted units at the same day’s NAV. If he submits the application after 3 pm, he will be eligible for next day’s NAV. Unlike liquid funds, you need not transfer the funds before the cut-off time.

Type of fund

Cut-off time

Liquid Fund

2 pm

Equity Fund

3 pm

Debt Fund

3 pm

If an individual invests more than Rs 2 lakh, he will need to submit the application and transfer the funds with the mutual fund house before the cut-off time. The cut-off timing rules apply based on the basis of when the amount gets deposited, irrespective of the time of submitting the application.

Conclusion

Cut-off timings matter to individuals who invest for a short-term. Individuals who invest from a long-term perspective do not bother about cut-off timings as one day’s movement in NAV will not make a lot of difference to them.

Have Referral Code?

Similar articles

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


Banner

What are cut-off timings in mutual funds?

Nutan Gupta

30 May 2017

New Page 1

A lot of people would be unaware of the fact that mutual funds have cut-off timings. No, the cut-off time doesn’t mean that it will restrict your purchases and redemptions. The cut-off time determines the NAV (Net Asset Value) you get when you buy or sell a particular mutual fund scheme. An individual is allotted the NAV depending on the time he submits his application and money with the fund house. This time is known as the cut-off time in a mutual fund.

Liquid, debt and equity funds have different cut-off timings. An individual can be allotted NAV of the same day, previous day or even the next day based on the time he submits his application and money. The cut-off time for liquid funds is 2 pm. If an individual invests before 2 pm, he will be allotted mutual fund units at the NAV of the previous day. However, if an individual fails to transfer the funds before 2 pm, he will be allotted units at the NAV of the same day, irrespective of the time of submitting the application.

As far as equity and debt funds are concerned, the cut-off time is 3 pm. If an individual submits the application before 3 pm, he will be allotted units at the same day’s NAV. If he submits the application after 3 pm, he will be eligible for next day’s NAV. Unlike liquid funds, you need not transfer the funds before the cut-off time.

Type of fund

Cut-off time

Liquid Fund

2 pm

Equity Fund

3 pm

Debt Fund

3 pm

If an individual invests more than Rs 2 lakh, he will need to submit the application and transfer the funds with the mutual fund house before the cut-off time. The cut-off timing rules apply based on the basis of when the amount gets deposited, irrespective of the time of submitting the application.

Conclusion

Cut-off timings matter to individuals who invest for a short-term. Individuals who invest from a long-term perspective do not bother about cut-off timings as one day’s movement in NAV will not make a lot of difference to them.

Have Referral Code?