April 6, 2020

Latest Mutual Fund cut-off time in India 2020

Due to recent volatility in the equity market, many are searching for Mutual Fund cut-off time in India and especially for 2020 (I mean the current cut-off time). Let us see the latest cut off timings.

What is the meaning of Mutual Fund cut-off time?

First le us undersatnd what is the Mutual Fund cut-off time.

Cut-off time determines what NAV you will get while buying or selling the units in Mutual Funds. Simply to say, if you invest before this cut-off time, then you will get the same-day NAV. Otherwise, you will get the another day’s NAV.

NAV or the Net Asset Value of a mutual fund is the cost at which a single unit of the mutual fund can be bought/sold by an investor. The NAV of any mutual fund is calculated and revised at the close of every trading day.  NAV is like an MRP of a product (with no discount).

Suppose if NAV of your fund is Rs.20 and you are planning to invest Rs.10,000, then you will receive the units of 500 (Rs.10,000/20). Same way after a few days, the same fund NAV jumped to Rs.30, then if you wish to withdraw the money, then you will receive Rs.15,000 (Rs.30*500).

Hence, many track this NAV 24*7 🙂

Tracking such NAV now turned a fashion as everyone wish to invest at LOWEST NAV. But we all forgot to track the fund performance. Instead, we turned to follow the NAV. I have written a recent post on this “Are you suffering from NAV Syndrome?“.

Let us see the applicable Cut-Off timings for purchase and redemption on all categories of mutual funds.

What is the cut-off time for Switch and STP (Systematic Transfer Plans)?

When you request for swtich or STP, it is nothing but a redemption from one fund and investing in another fund. Hence, as per the above rules itself the NAVs are procesed for both redemption and purcahse.

Along with this, there is something called turn around time also. Hence, based on this timings, the NAV will be alloted to you. This turn around time is called at TAT.

For investments the TAT is T+1.

For redemption, the TAT is T+3 for Equity Funds, T+2 for Debt Funds and T+1 for Liquid Funds.

Hence, based on these TAT rules, the new fund where you are opting for STP or switch affects the NAV rate.

Mutual Fund cut-off time in India from 7th April 2020 to 17th April 2020

Taking into account the impact of the revised trading hours for various markets as per the RBI Press Release dated April 03, 2020, SEBI has decided to reduce the cut-off timing for both subscription and redemption in various mutual fund schemes for a temporary period. The revised cut-off timing are given as under:
In case of subscription
– For Liquid and Overnight Funds – 12:30 p.m. (earlier it was 1.30 PM)
– For other than Liquid and Overnight Funds – 01:00 p.m. (earlier it was 3 PM)

In case of Redemption
– For Liquid and Overnight Funds – 01:00 p.m. (earlier it was 3 PM)
– For other than Liquid and Overnight Funds – 01:00 p.m (earlier it was 3 PM)

Conclusion:-As I said above, if you are long term investor, then such daily ups and downs in NAV are common things. By tracking the NAV (but not performance), you are trying to TIME THE MARKET. This will never going to succeed and will not impact your long term wealth creation. Hence, try to come out from this phobia of NAV Syndrome.

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