How to redeem Mutual Funds online

Mutual Fund redemption is a process wherein an investor sells his/her mutual fund units back to the mutual fund company (AMC). It means they are withdrawing units (known as redemption in mutual fund parlance) to obtain returns/ principal from the mutual fund scheme.

Mutual Fund investors, especially beginners, worry about how to redeem mutual fund, on the completion of a desired financial goal. In this read, we explain the same so that investors understand that investing in and redemption from mutual funds is equally simple as well as hassle free.

Redemption is nothing but a process of withdrawing units from your mutual fund investments and getting the money back from your investment at the net asset value (NAV) prevailing on the redemption day. Let us understand more about this process as we proceed with the article.

The investors plan redemptions of funds once they are close to or have achieved the desired financial goal or need money immediately for other reasons or simply for profit booking. Let us explore some of the situations –

  1. Unexpected Financial Crisis - This happens to be one of the most common reasons as to why investors feel the need to redeem their mutual fund investments. Due to an unexpected financial crisis in family or otherwise, the investor uses the investment corpus as an emergency fund to cover the expenses.
  2. Fund does not fulfil the objectives - Although staying invested for the long term is ideal for mutual fund investments, some active investors tracking the market might feel otherwise. If they believe that the long term prospects are not in line with their financial objectives, they can plan redemption.
  3. Scheme underperforming for a while - An investor must keep a close watch on their portfolio to track their investments. If they find out that a particular fund or funds have been underperforming for a while, in such a case, the investor can choose to redeem the funds if they feel that it is not a worthy investment or not in line with their financial objectives anymore. Though the ideal situation here is to remain invested for a long time period to reap maximum benefits from mutual fund investments.
  4. Market highs - Financial experts believe that it is not possible for investors to time the market. One should sell their fund units once they have reached the desired financial goal, not when the markets are high. Although the booking of profits at this time might sound like a lucrative idea, it might not always be ideal or feasible for the long term. One needs to be patient with the invested amount and give it time to grow for attaining the goal that they aim for.

After understanding the reasons for redemption, investors should explore how to redeem mutual funds and also how to redeem mutual funds online. Please see the ways you can redeem your mutual funds -

Trading or Demat Account - If one had purchased mutual funds through demat or trading account, redemption of units should also be done from the same account by calling the broker with whom the investor has the trading and demat account. Once he/she has completed the redemption process, the amount is reflected in the bank account registered in the scheme folio through electronic payout. Here the process is completely online.

Directly through the AMC or the RTAs - Most Mutual fund investments in the current times take place directly through AMCs or the RTAs (registrar and transfer agent), either online or offline. In this case, the investor, at the time of redemption, can visit the AMC office (offline), or they can redeem the units online by visiting the AMC website. Once the process is completed, the amount is sent to the registered bank account in the scheme folio. If the investor has not provided the IFSC code, then the AMC can send an account payee cheque through courier.

Agent or Distributor - An investor can choose to redeem their mutual funds through their mutual fund distributor. They can submit the duly signed redemption form to the distributor who in turn can submit to the AMC office or at the RTA office.

How to redeem mutual fund online – We discussed how you can redeem mutual fund units through your stock broker, the AMC, RTA or the mutual fund distributor (MFD). Please note that through the AMC or the RTA you can submit the redemptions online and within 2-3 steps the redemption is fulfilled.

However, the investor should note the point that an AMC allows only its schemes to be redeemed online or offline. However, the RTA can accept redemption of various AMC schemes serviced by it. Currently there are two RTAs – CAMS and KARVY.

You may ask How to redeem mutual fund online through a mutual fund distributor (MFD). The answer is yes, provided the MFD has a mutual fund online buy sell facility. Likewise, there are numerous mutual fund online platform through which also you can redeem mutual funds online. Those who want to know how to redeem SIP mutual fund online, should note that the process remains the same for SIP investments too.

How much time it takes to redeem mutual fund – If you have submitted the redemption within 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 to you after adjusting the exit, if any applicable to your redemption. After you have done the redemption, the most important question is when you get the redemption proceeds in your bank account.

Please note that irrespective of the way you redeem your funds – online, offline or through your broker – the time taken to get the money is same. See the following examples –

  • Liquid / money market or overnight funds – You get the credit within 1 working day after the redemption transaction. It is known as T+1 working day
  • Other than liquid / money market or overnight funds – It take Transaction + 3 working days. Example – if you have redeemed on Monday, you should get the credit on Thursday, if there is no holiday in between.

We discussed how to redeem mutual fund online and also how much time it takes to redeem mutual fund but the most important question before redeeming a mutual fund is whether you really need the money for a purpose or just booking profit / and also if you have checked if any exit load is applicable on your redemption. Mutual fund redemption is an easy and quick process, one need to understand this before starting the mutual fund investment, to remain trusted in the process.

An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund.
For information on one-time KYC (Know Your Customer) process, Registered Mutual Funds and procedure to lodge a complaint in case of any grievance Click Here.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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