A Short Guide to Redeeming Your Mutual Funds
Mutual funds aren’t generally meant to be sold or redeemed before the expiration of their designated time frame. However, there may be situations where you may feel the need to redeem your mutual funds. This usually occurs when the fund starts to under perform or the market becomes uncertain. For many investors, this is the time they start thinking of redeeming your mutual funds.
However, you need to remember that it is possible for mutual funds to generate good returns despite uncertain market conditions. More importantly, redemption should always be preceded by thorough research into the fund’s performance. You must also be clear about why you want to sell off your mutual funds. After all, mutual funds are managed by professionals.
If you have strong reasons for selling your mutual funds, here is a short guide to redemption.
Mutual Funds Bought Via Distributors or AMC
Most people tend to get their mutual funds from the AMC or via a distributor. For redeeming these mutual funds, you have to send a redemption request duly signed to the respective office.
Typically, the redemption form will ask you to provide details such as your name along with information pertaining to the mutual fund. This includes the plan, scheme details, folio number and the total number of units that you want to redeem. More importantly, all holders of the mutual fund will have to sign that slip. The money from the redemption will be sent directly to your registered bank account.
Mutual Funds Bought Online
If you have bought your mutual funds online, you can only redeem them via a trading account. The alternative would be the AMC’s website. To redeem, you must log into your account. Choose your mutual fund as well as the total number of units that you want to redeem. Confirm the order to proceed. The money will be credited to your account after redemption.
Additionally, there are central service providers that give you the option of selling mutual funds that you have purchased from several AMCs. However, they might not cover all AMCs. Their form can be downloaded online or you can visit their offices.
Other Points to Remember
Here are a few more things you must remember when you are selling your mutual funds.
The Applicable NAV: It is essential to note the time of the day when you send your redemption request. The NAV for the day will be declared only after the trading for the day has closed. Be that as it may, the NAV is actually applicable to redemption requests that have been received before 3 pm of the day.
The Turnaround Time: After the redemption request has been received and checked, it can take a maximum of 3 business days for the money to get credited.
The Exit Loads and Taxes: It is possible that you may have to pay exit loads as well as taxes when you are redeeming your mutual funds, depending on the duration of your investment. As such, check with the AMC about the applicable exit loads and taxes before confirming the redemption.
Before redeeming or selling your mutual funds, always consult with your financial advisor. After all, your ultimate aim should be to achieve your financial goals.
Mr. Ajay Kumar Jain, M.Sc, Chief Managing Director
Being the Chairman cum Chief Managing Director, he focuses on holistic investment planning and wealth management and tries to make investment planning simpler for retail and HNI investors. Investor education is one of the prime things that Mr. Ajay Jain focuses on as he believes financial education is the foundation of successful investing. With over two decades of experience, Mr. Jain has made a mark in the Indian mutual fund industry due to his compassion and sheer hard work.