Mutual fund redemption is a process of selling mutual fund units back to the asset management company (AMC), which manages your fund. It means as a subscriber you are withdrawing units – called ‘redemption’ in mutual fund parlance. When you redeem your MF scheme, partially or fully, you receive funds in your bank account linked with the MF account within 3-4 working days. Hence, in that way, mutual funds are very beneficial for an investor who likes liquid investment as it makes exit very easy and instant.

Whenever you decide to redeem your mutual fund, you must consider some key points to ensure that you get good returns. Always remember that fund houses fix NAV (net asset value) based on a cut-off time on a daily basis. So, if you plan to redeem units from your MF account, you should request redemption within the time set by your fund house. Currently, fund houses follow the cut off timing for deciding mutual fund NAV as 3 PM. It means that your units will be redeemed at the current day’s NAV if the redemption request is made before 3 PM. Mutual fund net asset value represents a fund’s per share market value and includes the total of all the assets of a certain fund less the liabilities.

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How to redeem mutual fund units?

You can redeem your mutual fund units using either of the modes – online or offline. Online redemption can be done anytime seven days a week, but for offline redemption, you have to visit the office of the fund house on any working day and fill out a redemption form mentioning all the details.

Offline redemption: If redeeming mutual fund units physically, you will be asked to fill out a redemption form, in which you will be required to fill in details such as the unit holder’s name, name of the scheme, folio number, number of units to be redeemed, etc. After filling it, you will have to sign it and submit it to the designated office of your asset management company. The filled form can also be submitted at any official point designated by your MF house that accepts transactions.

Online redemption: All asset management companies have their official portals these days. You can simply log in to the website of your mutual fund house using the folio number and PAN and generate a redemption request. On the redemption page, you will be asked to enter the amount or the number of units to be redeemed. If you have purchased a mutual fund scheme through your personal Demat or trading account, you need to log in to the official website or the app of the respective bank or financial institution and carry out the redemption process.

How long does it take to receive the redemption amount?

Once the redemption request is verified and processed by the fund house, your amount against redeemed units of the fund will be transferred to your bank account. It also depends on the type of scheme you subscribed to. If it is a debt-oriented fund or a liquid fund, you will get redemption money within one or two working days. On the other hand, if it is an equity mutual fund, it may take two to three working days to receive the money in your bank account.