You might already be aware of the fact that mutual funds have an actual cut-off time for redemption and investment. However, the cut-off time is not for restricting selling and purchase. It is used for determining NAV or Net Asset Value, you will be getting when you buy or sell the mutual fund units. The allotment of the NAV will depend on the time when you are submitting the application and money that you are willing to spend. This time is referred to as the cut-off time in the world of mutual funds.
The cut-off timing differs with debt, liquid, and equity funds. You might be allocated the navy on the same day or the next day, depending on your time of submission.
The cut off time for liquid fund is 2 pm. If you are investing in mutual funds before 2 pm, you will be allotted to the NAV of the previous day. However, this will happen only if you are transferring the fund before the cut-off time. If you miss the cut-off time and submit the application after 2 pm, you will be allotted to the NAV units of the same day. In case you submit the application but fail to transfer the money before 2 pm, you will not be eligible for the previous day NAV.
For debt mutual funds, the cut-off time is 3 pm. If the investor is submitting the application before 3pm, he/she will get the same day NAV. Submitting after 3 pm will give you the NAV of the next day. For debt funds, you do not have to transfer the fund before the cut-off time.
In case you are investing more than 2 lakh, it is important to make sure that the funds, as well as the application form is submitted before the cut-off time. Keep in mind that even if you apply before the cut-off time, the rules of cut-off timing are applicable. This is largely dependent on the money that you are depositing. If you are investing with a long-time frame, one day difference will not hamper your mutual fund investment. Cut-off time matters for people who are investing a large sum of money.