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Mutual fund Cut Off Timings

Mutual Fund Cut-off Timings

Mutual fund cut-off timings are one of their most interesting aspects. Mutual funds are known for their liquidity and can be traded throughout the day. The order to buy or redeem units are executed at the Net Asset Value (NAV), which is calculated after the market closes each trading day. You could be allotted the NAV on the same, previous or next-day depending on the time you submit the application and money to the mutual fund. 

These are the mutual fund cut-off timings. This timing varies for liquid, debt and equity funds.

The cut-off timings for different mutual funds are as follows:

Equity and Debt Funds

The cut-off time is 3 pm for equity and debt-oriented funds.

For applications below INR 2 lakh, if you submit the application form before 3 pm, you are allotted the same day's NAV. After the cut-off time, you get the NAV of the next day.

If the investment is above INR 2 lakh, the cut-off time depends on the time you deposit money in the fund's account. Ensure that you deposit the money in the fund house's account before the cut-off time for the same day’s NAV.

Liquid Funds

The cut-off time is 2 pm for liquid funds.

If the investment is before 2 pm in a liquid fund, you will be allotted units at the previous day’s NAV. If you miss the cut-off time, the NAV of the same day will be applicable.

Suppose you submit the application before the cut-off time, but do not deposit the funds, you will be eligible for the same day’s NAV.

To get the previous day’s NAV, you must submit the application and transfer the funds before the cut-off time for investment in liquid mutual funds.

Any loss in NAV incurred by the investor/scheme/plan on account of delays in settlement of cheques or demand drafts shall be compensated by the Asset Management Company (AMC).

The mutual fund cut-off timings are summarised in Table 1 below: 

Category

Debt and Equity Funds (Above INR 2 Lakhs)

Liquid Funds

Cut-Off Time

3 pm

2 pm

Application submitted and Money deposited before the cut-off time

Same day NAV

Previous day NAV

Application submitted before and Money deposited after the cut-off time

Next day NAV

Same day NAV

Table 1

Why is cut-off time essential while investing in Mutual Funds?

For individuals investing a large amount of money daily movements matter because of the scale of investment. A percentage of change can be significant for an investment of INR 25 Lakhs but hardly have any impact on INR 2,500. Further, day-to-day NAV movements do not affect a long term investor.

The cut-off timing for the NAV for your units gains significance when you consider the entry and exit loads that may chip off your net investment. The exit load reduces the NAV per unit received on redemptions. Similarly, an entry load increases the NAV purchase price.

Happy Investing!

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