redemption in mutual fund investment means withdrawal Investment by investor. Redemption is usually done when the investor needs money, or the investment objective is met, or when Financial Planning The review demands a change in allocation, or the scheme is not able to deliver the desired results.

ways to redeem

Investors can redeem partly by specifying an amount or the entire corpus by selecting the “All units” option. Investors can choose to capitalize only the profit and keep the principal invested, or only that portion of the units that qualify for the LTCG so as to minimize it. tax implications,

How to redeem

If the units were purchased using a trading or demat account, then redemption can be done using the same – by calling the broker or by making a redemption request using the online platform. If the investment was made directly, one can fill up a redemption form downloaded from the MF website and submit it to the AMC or RTA office. Alternatively, if one is using the web interface of MF, the same can be used to redeem. If the investor has made the investment through a distributor or advisor, he can provide the facility of redemption.

redemption process

If the investor has deposited the redemption within the cut-off time (generally it is 1:30 PM for Liquid Funds and 3:00 PM for other funds), the day’s NAV after adjusting the exit load Applies, if any, to redemption. In case of liquid/money market fundThe investor gets the credit within 1 working day. In other cases, it takes +3 working days to receive the credit of income.

noteworthy

• Exit load is a charge that can be levied at the time of redemption if the mutual fund is redeemed exclusively in equity funds within a short holding period.
• One should consult a mutual fund advisor or tax advisor to know the tax implications that are applicable while redeeming the investment.

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