How To Redeem Your Mutual Funds in Simple Ways?

Due to various situations, you may want to withdraw your mutual fund units, so it is important to keep in mind that mutual fund redemption has certain rules and guidelines. Follow them to encash the maximum amount without any hassles. 

What is Mutual Fund Redemption?

Call it an exit, withdrawal or selling your units – this is what you do to get returns. Mutual fund redemption is the way for you to access any returns on your investment. 

While redeeming units, consider the timeline of approval and the expenses it may incur in the form of the exit load. There are various types of redemptions based on your fund or scheme. You can choose which one will work for you:

• Unit-Based Redemption: This is when you choose to redeem a few units  
• Amount-Based Redemption: This is when you choose the specify the amount which you want to redeem
• Complete Redemption: This is when you redeem the entire investment amount 

Mutual Fund Redemption Timeline

In the case of open-ended schemes, you can redeem your funds anytime based on your goals or needs. You may want to withdraw units under the following conditions:

• Condition 1: Unsatisfactory or Underperforming Schemes 

While you may try to pick a mutual fund that agrees with your investment objectives, sometimes market forces and other external factors may reduce its effectiveness. If you think that a fund has lost its potential in your portfolio, you may want to withdraw. 

Your changing goals, age or stage of life may even impact this decision. For instance, you may want to redeem your investment in equity in order to stabilise your portfolio as you near retirement. 

• Condition 2: Better Opportunity 

If the markets are thriving, then you may want to sell your units and invest in something else. 

• Condition 3: Financial Needs

If you have an emergency, such as medical needs or home repairs, to address, mutual fund redemption may be the way for you to access your returns. 

• Condition 4: Lacklustre AMC Performance 

The decision to sell your units may also be linked to the fact that the fund managers and Asset Management Company are not growing your returns as per your liking.  

How to Redeem Your Mutual Fund

Redemption requires you to keep the following information at hand:

• Folio Number
• PAN

Make sure you know the name of the scheme and the number of units you want to sell. 

There are a number of ways to go about this process, such as:

Redemption Through Your AMC

Most AMC allows you to choose online and offline redemption requests at your convenience. Thus, you can redeem your MFs in the following ways:

• You can visit their office
• You can make an online request

Once your request has been accepted you will receive your money via NEFT or by cheque. Mutual fund redemption online is a lot faster than the offline mode, so choose it if you need to access funds quickly. 

Redemption Via your Demat/ Trading Account

Another way to redeem mutual fund units is through demat and trading accounts. Once you apply for redemption and your request is accepted, you will receive an electronic payout. It can be via NEFT or IMPS, and the amount will be credited to your registered bank account.

Redemption through an RTA or Distributor

Register and Transfer Agents, such as KARVY and CAMS, also offer the facility to redeem your mutual funds units. You can go for mutual fund redemption online or offline by submitting the redemption form at their office. 

How Long Does It Take?

Though going for mutual fund redemption online may be quicker, here’s an overview of the amount of time it takes for you to get your returns:

• Liquid funds may take 1 working day post your request
• Debt funds may take 2 to 3 days
• Equity funds may take 3 to 4 days

While the average redemption time is 3 working days, with the exception of liquid funds, you may face delays in case of exceptions, such as if your bank account has been changed within 10 years or there was a sudden holiday declaration that was announced by the state you reside in.

If you are redeeming units in order to bridge a financial gap, take a moment to rethink. You have the option to allow your investment to continue and take a Fibe Loan Against Mutual Funds and get 80% of your NAV as your loan amount.

With up to ₹5 lakhs as the loan amount and a flexible repayment structure, you can fulfil your needs with ease. Download the Fibe App now to apply within 10 minutes and get the loan amount in your bank account.

FAQs on Mutual Funds Redemption

What is the redeem meaning in mutual funds?

Redeeming mutual funds units means selling them or withdrawing them to access your returns. Redemption may also come with an exit load. 

When is the optimal time to redeem mutual funds?

This depends on your need to access funds as well as the NAV. If the NAV is high, then your returns are high. 

Is it possible to redeem a mutual fund after one year?

Yes, the minimum period for mutual funds varies based on the types you invest in. You can redeem short and ultra-short debt funds in less than a year and equity funds after one year. 

What are the new regulations regarding mutual fund redemption?

Recently, the SEBI has revised the cut-off timing on the mutual fund redemption as follows:

• For all mutual funds that are not liquid funds, the cut-off time is 3 PM, which means that you will receive the NAV on the same day 
• For liquid funds, the cut-off time is 2 PM, which means that you will receive the previous day’s NAV if you place the order before this time

Can I redeem my mutual fund investments at any time?

If you invest in open-ended funds, you can redeem units whenever you prefer. However, you still have to take care of the following:

• Exit load
• Cut-off times
• Taxes on capital gains