How to redeem mutual funds offline or online - Mutual fund redemption (2024)

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Feb 21, 2024, 05:32:53 PM IST

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Mutual fund redemption

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

Text: Centre for Investment Education and Learning (CIEL)

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Different ways to redeem mutual fund

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 the units that qualify for LTCG to minimise the tax implication.

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How to redeem your mutual fund

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 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 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.

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Processing of redemption of mutual fund

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 applicable, to the redemption. In the 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.

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Key points to note

1) 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.
2)One should consult the mutual fund adviser or tax adviser to know the tax implications applicable at the time of redeeming the investments.

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