Mutual Funds Cut-Off Timings

What are mutual fund cut-off timings?

Cut off timings of mutual funds are set in order to regulate the Net Asset Value (NAV) an interested party or investor can achieve for purchase or selling of units of their mutual fund schemes. Cut off timings can also be defined as timings of submission of application and investing in the mutual fund scheme that determines the NAV of allotted units. Allotment of units generally take place within 3-4 business days of the submission of application and payments. The mutual fund schemes are mandated by SEBI to disclose their NAVs on a daily basis. Securities and Exchange Board of India (SEBI) determines the cut off timings of mutual funds. It is very crucial to consider the cut off timings while subscribing or redeeming mutual funds especially for investments that involve a large sum of money. However, for investments made for a longer tenure, cut off times may not make a big difference.

NOTE: The cut-off timings were reduced in April 2020 by SEBI owing to the market circumstances amid the coronavirus pandemic. Then later, SEBI decided to extend the reduced cut-off timings for subscription as well as redemption in mutual fund schemes. This was as per the RBI Press Release on 30th April, 2020 regarding extension of the prescribed amended timings of trading hours of different markets that are regulated by RBI.

The revised cut-off timings for mutual funds will be applicable till further release by RBI. Post removal of these revised timings the pre-covid cut-off timings will be applicable. Here are the cut-off timings which are applicable as of now.

Subscription

FundCut-Off TimeApplication Before Cut-off Application After Cut-off
Liquid & Overnight funds12:30 pmNAV of previous dayNAV of same day
Rest of the funds01:00 pmNAV of same dayNAV of succeeding day

Redemption

FundCut-Off TimeApplication Before Cut-off Application After Cut-off
All Funds1:00 pmNAV of same dayNAV of succeeding day

NAV or Net Asset Value basically signifies the market value of instruments held by the mutual fund schemes. NAV per unit signifies the market value of securities or instruments which is divided by the total number of units of the scheme on some specific day. As per SEBI mandates,the mutual funds need to disclose their NAVs of the scheme by 11:00 pm every business day on the website of AMFI and the mutual fund’s website.

There are different cut off timings set for subscription to the Liquid & overnight funds and rest of the funds. Cut off timings are set for redemption as well. 

Cut-off timings in mutual funds

Liquid Fund Cut Off Timings:

Subscription: In case of subscription, the cut off timing for liquid and overnight funds is 1:30 pm. Therefore, if an investor has invested before 1:30 pm in a liquid fund, units will be allotted at NAV of the previous day. This will be applicable only in the case of transfer or payments made by the investors before the cut off time. In case, the cut off timing is missed by investors and the request for subscription & transfer of funds takes place after 1:30 pm, units will be allotted at NAV of the present day. It is crucial to consider the cutoff timings of the fund as it affects the NAV of the allotted units.

Redemption: In case of redemption of liquid or overnight funds, if the application is received till 1:30 pm, then the redemption is set in accordance with the fund’s NAV of the present day. 

In case of redemption of liquid or overnight funds, if the application is received after 1:30  pm, then the redemption amount is set in accordance with the fund’s NAV of the next day.

Equity, Debt & Hybrid Fund Cut Off Timings:

Subscription: In the case of subscription, both equity mutual funds and debt mutual funds have the same cut off timing which is 3:00 pm. For equity and debt mutual funds, if the application for subscription to a fund is made before 3:00 pm, then mutual fund units will be allotted at NAV of the same day. And if the application to purchase an equity or debt fund is submitted after 3:00 pm, then mutual fund units will be allotted at NAV of the succeeding day. 

Investors should note that if the amount of investment is lower than Rs. 2 Lakhs in equity or debt funds, timings of transfer of funds will not be taken into account and only the timing of application will be considered for the allotment of funds.

And if the amount of investment is equal to or higher than Rs. 2 Lakh in equity or debt funds, the timings for both the subscription application and payment will be taken into consideration for the allotment NAV of the fund. The NAV of units will then be fixed according to the timings of receipt i.e either before the cut-off time where the NAV of units will be of the same day or after the cut-off time where the NAV of units will be of the succeeding day.

Redemptions: In case of redemption of equity or debt mutual funds, if the application is received before 3:00 pm, then the redemption amount will be based on the fund’s NAV of the present day. 

In case the application is received after 3:00 pm, then the redemption amount will be set in accordance with the fund’s NAV for the next day.

Normal Cut-Off Timings for Mutual Funds

Subscription

FundCut-Off TimeApplication Before Cut-off Application After Cut-off
Liquid & Overnight funds1:30 pmNAV of previous dayNAV of same day
Rest of the funds03:00 pmNAV of same dayNAV of succeeding day

Redemptions

FundCut-Off TimeApplication Before Cut-off Application After Cut-off
Liquid & Overnight funds1:30 pmNAV of same dayNAV of succeeding  day
Rest of the funds03:00 pmNAV of same dayNAV of succeeding day

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