Mutual Fund Alert: SEBI’s move is linked to ongoing efforts to further strengthen the security of investors’ funds held with brokers and clearing members.
What will change, after all?
Earlier, mutual fund houses used to apply NAV based on a uniform cut-off time for all channels. Now, SEBI has implemented different cut-off timings for online and offline redemption requests in overnight schemes. The revised timetable is as follows:
Offline or physical mode
- If the redemption request is placed before 3:00 pm, the investor will receive the closing NAV of the previous day on the next business day.
- If the request is placed after 3:00 pm, the investor will receive the NAV of the next business day.
Online Mode (for Overnight Funds only):
- Investors will have time till 7:00 PM to get the same day’s NAV.
- For requests made after 7:00 PM, the NAV of the next business day will be applicable.
SEBI stated in its circular that “business day” refers to days when money markets are open and available. Days when money markets are closed or unavailable will not be considered business days.
How will it affect investors?
If you want to withdraw money from overnight or liquid funds, paying attention to the time has become even more important. Online investors will get more flexibility, as they will get time till 7 pm. On the other hand, those investing through offline mode will have to submit the request by 3 pm, otherwise, the NAV of the next business day will be applicable. If you send the request after the cut-off time, then the NAV of the next day will be applicable. This may affect your returns.