What should you know about Redeeming Mutual Funds?

The world of mutual funds is really tricky if you are not focused.  It is not rocket science but you have to be dedicated so as to make the most of your investments.  Whether to invest in ELSS, SIP or other schemes; the choices is always yours. It is always better to go through the option before you make the decision.

If you are thinking How to redeem mutual funds online then the good news is that the process is quite easy. And on the basis of the kind of mutual fund you hold, money can get credited to your bank account in a maximum of four to five working days after you submit a redemption request to that specific fund house.

How can an investor redeem mutual fund units?

A unit of a mutual fund can get redeemed on any business day. In the physical mode, investors might require to fill in the requisite transaction slip and it can be download from the fund house website or that of detach from the bottom of your account statement.  The redemption application could get submitted at the fund house office or any of the official places of acceptance of transactions, across the nation. Various fund houses also permit online redemptions and it is through their websites. In case you have invested via an online portal you might redeem your mutual fund units online as well.

How do you know what is the amount that shall be credited?

You know it is   easy to calculate the estimated value of your investments. It can be done by increasing the number of units you hold on the day with that day’s NAV of that specific scheme. However it shall be subject to

-   Exit load, in case any for the scheme and

-   Applicable NAV’ i.e., the NAV that relies on the day and time when you deposited your redemption request. For example in case you are submitting your redemption before the cut-off time on any business day you are permitted to the NAV of the same day. However you have to note down that securities transaction tax (STT) is valid on redemption of equity-oriented schemes.

How long will it take for redemption proceeds to get credited?

Redemption proceeds for liquid or debt-oriented units get paid within one to two working days. For equity mutual funds, the sum is credited inside four to five working days. The redemption proceeds get paid to the investor’s registered bank account provided that the bank branch is allowed for RTGS / NEFT. In case the fund house does not have full bank details, cheques get sent to the investor.

What charges or load will the investor have to pay on redemption?

Usually most of the equity-oriented schemes have an exit load of one percent in case redeemed before a year from purchase. There are even some schemes that have Liquid or ultra-short-term funds do not have any type of exit load. So, in case you hold an equity mutual fund and you wish to redeem before one year, an exit load, shall get deducted from the NAV that is applied for your redemption per unit.

 Conclusion

So, the more you know the better you can perform in the world of mutual funds!