How to redeem your mutual fund investments

Redemption in mutual fund investments means withdrawal of investment by the investor. Redemption is usually done when the investor needs funds, or the objective of the investment is fulfiled, or when the financial plan review demands change in allocation, or the scheme is not able to deliver desired results.

Ways to redeem

Investors can redeem in part by specifying an amount or the entire corpus by choosing the option “All units”. Investors can also choose to redeem only the gain and keep the principal invested, or only that portion of units that qualifies for LTCG so as to minimise the tax implication.

How to redeem?

If units were purchased using a trading or demat account, redemption can be done using the same –by calling the broker or placing redemption requests using the online platform. If the investment was made directly, one can fi ll up a redemption form, downloaded from MF website and submit it to the AMC or RTA offi ce. Alternatively, if one is using the web interface of the MF, the same can be used to redeem. If the investor has invested through a distributor or advisor, he/she can facilitate the redemption.

Processing of redemption

If the investor has submitted the redemption within the cut off time (usually it is 1:30 pm for liquid funds and 3:00 pm for other funds), the NAV of the day is applied after adjusting the exit load, if any applicable, to the redemption. In case of liquid /money market funds, the investor gets the credit within 1 working day. In other cases, it takes +3 working days to receive credit of proceeds.

Point to note

  • Exit load is a charge that may be levied at the time of redemption in case the mutual fund is redeemed within a lesser holding period especially in equity funds.
  • One should consult the mutual fund adviser or tax adviser to know the tax implication applicable at the time of redeeming the investments.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.


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