Mutual Fund Cut Off Timing

Dear Investor, Cut-off timings for MF transactions has been revised with effective from 1st February 2021. For details, please refer following revised cut-off timings chart;

 
Scheme Category
Scheme Cut-Off Timing
Purchase Redemption/SWP Switch/STP/ASTP
L0
13:00:00 NA NA
Liquid
01:00:00 PM 03:00:00 PM 01:00/02:30 PM
Debt
02:30:00 PM 03:00:00 PM 02:30:00 PM
L1 (Debt)
02:30:00 PM NA NA
Equity
02:30:00 PM 03:00:00 PM 02:30:00 PM
L1 (Equity)
02:30:00 PM NA 02:30:00 PM
Back To Mutual Fund

Mutual Funds: There’s something for everyone

A mutual fund is a financial product that includes bonds, shares, and other securities. In the mutual fund investment, the fund is collected from the different investors to invest in shares, bonds, types of securities, money market instruments, and other investment intermediaries. A mutual fund is an opportunity for the investor which allows diversification to many different stocks.

Expert fund managers are responsible to invest the pooled money in those assets to earn good returns. The Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds of India (AMFI), (subject to the SEBI regulatory provisions) regulate the mutual fund. SEBI’s main objective is to protect the investor’s interest. It also regulates, supervises, and formulates the policies applicable to all the MF houses. SEBI and AMFI are also responsible to issue the guidelines to all the mutual fund houses from time to time.

Benefits of Mutual Funds investment:

  • Liquidity: MF investment allows their investor to redeem the units any time but with certain conditions such as pre-exit penalty and exit load.
  • Portfolio diversification: Mutual fund performance determines the strength of the investor’s portfolio. Diversification helps to reduce the risk. Investors' interests are therefore protected if there’s no or minimum performance in other purchased securities.
  • Expert managers: The expert managers keep the check on the market's ups and downs. The MF experts collect the investment funds from the investors and diversify these funds into different securities which will sustain profits.
  • Small investment: Investor can begin investing in top mutual funds in India with as low as ₹500. Investors have an option to either begin mutual fund investment through SIP i.e. fixed amount is invested for the fixed intervals.
  • Easy Accessibility: Some of the top Mutual funds can be brought easily from asset management companies. Other than the AMCs anyone can invest in mutual funds online.

How to determine which Mutual fund investment is best for you?

Every fund has a different set of objectives. To determine which mutual fund investment is suitable, you need to check the fund’s investment objective matches your financial goals and risk appetite. Based upon the risk taking ability, the investor can choose and invest in the Mutual funds.

Types of Mutual Funds

Based on the asset class, there are four types of mutual funds investors look into invested:

  • Equity Mutual fund
  • Debt Mutual fund
  • Hybrid Mutual fund
  • Liquid Mutual Fund
  • ELSS mutual fund- Tax saving mutual fund

How to Invest in Mutual Funds

You can now invest in mutual funds online from the comfort of your home. Mutual fund investment has become easier than ever before. Therefore, once you have identified the best mutual funds to invest in India, all you need to do is:

  • Open an investment account
  • Select the suitable Mutual Funds
  • Start investing with Lumpsum or SIP option
Open an Account

Safety, Liquidity and Returns in Mutual Funds

Safety Liquidity Returns

Mutual funds are regulated by SEBI. They must strictly invest as per the scheme document filed by them with SEBI.

However mutual fund investment is subject to market risk and past performance is not guaranteed in future.

Your capital may reduce or appreciate based on the performance of the underlying market.

Mutual funds regularly report to SEBI their performance.

Mutual fund investment is highly liquid.

You can submit the mutual fund units for redemptions and your investment will be redeemed to you based on the current price or Net asset value (NAV) as it is called.

Redemption request can be submitted online or physically at the office of the fund.

Liquid funds are credited to your bank on T+1 day. All rest are redeemed on T+3 days.

Mutual fund returns are in the form of capital appreciation /Dividend.

Funds pay dividend (in dividend schemes) based on the dividend/ capital gains generated on the underlying stocks.

The past performance of various funds is given in our recommended Mutual Funds section. The returns have also been indicated.

Some funds have done well while not all funds have been better than the market. Your gain is the increase in the value of the fund due to appreciation in underlying stocks.

Regulatory Oversight

SEBI is the regulating authority to ensure that the Mutual Fund functions in the matter stated in the offer document. In recent times SEBI has played an active role in curtailing the expenses incurred by the fund in management of the investments. The cost of management has been reduced from over 6% to less than 2.5%

There is also Association of Mutual Fund of India (AMFI) which has all Mutual funds as its members. This body also regulated its members and has rules for conduct of each member.

Mutual Fund distributors are the last mile connectivity with the investors which are regulated by SEBI. They are permitted to act as advisors and charge a fee from investor or act as a distributor and get fees from the Mutual fund. This protects the interest of the investor, since there is no conflict, wherein the distributor sells the products of MF that gives them high commissions.

BSE as well as NSE provide a platform wherein an investor through his broker can buy and redeem their mutual fund units. This is very convenient and easy.

Records of all the mutual fund holdings is kept with the Registrars. They accept money, allocate units, pay dividends and redeem units on request, all on behalf of the Mutual Fund. They also send regular holding statement to you.

Taxation

Mutual fund dividend is taxed as income from other sources. Difference in NAV at the time of purchase and redemption is taxed as capital gains tax. If the scheme selected is debt scheme, then long term capital gains will accrue after 3 years of investments. In case of equity scheme the long term, capital gains arise after one year.

ELSS is a scheme floated by most mutual funds that permit saving in taxes, since there is a rebate on investment. There is a 3 year lock-in for this investment.

FAQs on Mutual funds

1. How many types of mutual funds are available based on the risk factor?

Depending upon the risk level associated, there are three types of mutual fund available in the market:

  • High risk
  • Medium risk
  • Low risk

2. When should I begin to invest in mutual funds?

There’s no age limit when it comes to investing. The time when you start earning and saving you can start investing in mutual funds. There are many mutual funds scheme with different objectives. Whatever your age or goal is, you can start to invest in MF anytime.

3. For the regular income after retirement, which mutual fund is ideal to invest in?

To earn regular returns from the mutual fund during retirement by investing in the long-term fund, pension funds are the right option for you. Before investing in MF, you must consult a financial advisor.

4. Is it safe to invest in mutual funds?

Mutual fund investment is considered a safe investment if you understand it well. While investing in equity mutual funds, investors should not be worried about the minor ups and downs in returns. You must choose the appropriate mutual fund that suits your portfolio and investment goals.

5. Is it mandatory for the investor to have a bank account to invest in mutual funds?

Yes, it is important and mandatory for the investor to have an account with any bank to start investing in a mutual fund. An investor has to complete the KYC process to open an account with the bank.

6. How long should the investor stay invested in mutual funds?

It depends on the investment objective to understand for how long the investor has to stay invested in mutual funds. An investor has to review the investment status and progress periodically with their advisors. It is during such discussions, the decision whether to redeem, switch, invest or leave alone is made.

7. By any chance, if an investor misses Mutual Funds SIP, what are the consequences?

Many investors think that they will face loss if they will miss mutual fund SIP payment during the fixed period. To happen this, there can be several reasons. The investor must remember the following points:

  • Mutual fund companies don’t charge any penalty for the non-payment of SIP installment.
  • Your SIP will be automatically cancelled if you don’t pay for consecutive three months.
  • The investor’s bank will charge the penalty for discrediting the auto-debit payments.
  • To stop SIP under any circumstances the investor should put a request to the bank 30 days in advance.

8. What will happen if the mutual fund investor is dead?

Generally, mutual fund schemes don’t have any maturity period except for close-ended funds like ELSS. In case the investor passes away while the mutual funds' SIP is on or before the maturity term of the closed-ended mutual fund scheme, there is a certain procedure which is followed by the nominee, legal heir, or survivor in case of the joint holding of investment to claim the mutual fund proceeds. This process is known as transmission.

It is advised to the mutual funds' investor to add nominee always to the mutual fund investment same as any other investment. Keep the nominee updated about the same. The survivor or the nominee can request the transmission by submitting the valid documents and proofs which include the death certificate. The person who requests transmission must be KYC registered.

9. Is it important to have a fund manager to invest in mutual funds online?

The answer is YES. To generate good returns from mutual fund investments it is important to have experienced fund managers. The more they are experienced, the better are chances to make profitable decisions on mutual fund investments. Not only the experienced fund manager offer their expertise and competitive nature but they also bring collective wisdom from the data and information that have their hands on.

10. Can mutual funds investment help to save taxes?

In mutual fund schemes, the Equity-linked saving scheme (ELSS) is the tax-saving Mutual fund. In this mutual fund scheme, an individual or HUF can enjoy up to ₹1.50Lacs deduction from their total income under the section of 80C income tax act 1961. This scheme has the three years lock-in period starting from the date of allotment.

Once the lock-in period is over, an investor can redeem or switch the allotted units. ELSS mutual fund offers growth as well dividend option. An investor can invest by the SIP method. It is important to note that investment made up to ₹1.50Lacs in a financial year is eligible for the tax deduction.

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