Mutual Funds

Which NAV should apply to your transaction?

| Updated on November 15, 2017 Published on January 14, 2012

The Net Asset Value (NAV) of a mutual fund is the value per unit based on which investors purchase, redeem or transfer units in the mutual fund.

The applicable NAV for any transaction depends primarily on the time at which the transaction request is received at the official points of acceptance.

The time at which the transaction is received is evidenced by the ‘Time-stamp' on the request at the official points of acceptance and there are different timings and rules for liquid and equity/debt funds.

What is the NAV cut-off time for a purchase/redemption in liquid funds?

Investors should note that in the case of liquid funds, NAV is declared on holidays and non-business days. For example, NAV is declared for Sunday.

The applicable NAV for liquid fund purchases is as below:

In cases of purchase of liquid funds, if an application is received at the official point of transaction up to the cut-off time of 2.00 p.m. on a business day and the funds are available for utilisation on the same day before cut-off time, the previous day's NAV is applied.

That is to say, if your funds were available for utilisation before cut-off time on January 13, 2012, and you have put in an application before 2.00 p.m. on January 12, 2012, you will get the NAV of January 12, i.e. the immediate preceding day.

Irrespective of the time of receipt of the transaction, if funds are not available for utilisation on the same day, the applicable NAV would be that of the immediately preceding day on which the funds are available for utilisation.

To give an example, if you applied for a liquid fund on January 10, and the mutual fund received the funds for utilisation on January 16, you will get the NAV of January 15.

For redemptions, the rules regarding liquid funds are as follows:

For an application received on any business day, up to 3.00 p.m., the NAV of the day immediately preceding the next business day.

For an application received after 3.00 p.m., the NAV of the next business day would apply.

What are the guidelines for applicable NAV for equity/other types of Funds?

For Purchases: The NAV applicable for any transaction received on a business day before 3.00 p.m. would be the NAV of the same day. For applications received after 3.00 p.m., the NAV of the next business day would apply.

For example, if you deposited an application after 3.00 p.m. on a Friday, the NAV of the following business day – Monday — would be applicable.

However, if the application is over Rs 1 crore for debt schemes, the applicable NAV would be the NAV of the business day on which the funds are available for utilisation.

For redemptions: If a transaction is received before 3.00 p.m. on a business day, the NAV would be of the same day. Transactions received after 3.00 p.m. would be at the NAV of the next business day.

Would this mean that if I invested on Tuesday morning at 10.00 a.m. in a Liquid Fund and the funds were available for use by the mutual fund on the same day, I would get the NAV of Monday?

That's right, for liquid funds you would get the NAV of the previous day! In the case of an equity fund, you would get the NAV of Tuesday.

Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. The views expressed herein are general practices in the Mutual Fund industry and may vary on a case to case basis.

Published on January 14, 2012

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