Mutual Fund: Time elevated for submission of utility kinds, however you might not get identical day NAV
With most offices closed and some essential services, including the stock markets and other financial services like banks, mutual fund (MFs), etc, open with bare minimum employees during the Covid-19 lockdown, the Securities and Exchange Board of India (SEBI) had reduced the cutoff times for submission of MF transaction related forms.
To avail same day NAV, the market regulator in its April 6, 2020 order had reduced the cutoff time for subscription to Liquid and Overnight Funds from 1.30 pm to 12.30 pm, and for other schemes from 3 pm to 1 pm effective from April 7, 2020.
Want to buy/sell mutual fund at today’s NAV? Remember! You can’t invest/redeem up till 3 pm
SEBI extended the reduced transaction timings further in its two subsequent orders dated April 17 and April 31, 2020.
With almost all the services reopened, the Association of Mutual Funds in India (AMFI) had requested the market regulator to restore the original cutoff timings for MF transactions.
Accordingly, SEBI on October 15, 2020, has decided that cut off timings for applicability of NAV for both subscription and redemption for all schemes other than those categorised as Debt Schemes (Debt Schemes shall include Debt Schemes, Conservative Hybrid Fund, Conservative Plan of Solution Oriented Scheme, Fund of Funds scheme investing in debt oriented Mutual Funds and shall exclude Liquid & Overnight schemes) shall be restored to the original cut-off timings of 3 pm with effect from October 19, 2020.
While the subscription time for Debt Schemes and Conservative Hybrid Fund, other than Liquid and Overnight Funds has been increased to 1 pm to avail same day NAV, that of Liquid and Overnight Funds will continue to be 12.30 pm.
The cutoff time for redemption to avail same day NAV for all the Debt Schemes and Conservative Hybrid Fund, including Liquid and Overnight Funds has been relaxed to 1 pm.
The following table shows the current cutoff timings of different categories of MF schemes:
However, it is not guaranteed that if an investor submits his/her application to invest in a scheme before the stipulated cutoff time, he/she will get the units allotted at the same day NAV.
Applicability of NAV upon realisation of funds to make it difficult to invest in MF at a desired price
This is because, to bring uniformity, the market regulator has decided that the units of a scheme will only be allotted after realisation of investment money, which was applicable earlier for investments over Rs 2 lakh.
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