new Delhi. In the midst of the Corona crisis, Sebi has pushed forward the change in cut-off timing for investment in mutual funds, according to new guidelines. Earlier, SEBI had changed the time between 7 April 2020 to 30 April 2020. But now the dates have been extended to the next notice. There are many of us who have invested in mutual funds and they are either nervous due to the message of change in time by the mutual fund in their phones and some are trying to understand that in this cutoff time. How will the change affect their investment? If you also have this question in your mind, then through our report, you can easily understand what the cutoff timing means and why it has been increased? Also what will be the impact on our investment?
What is cutoff timing?
Whatever investment you have made in a mutual fund depends on the fund unit or the value of that fund / NAV (Net Asset Value) cutoff time. Actually, the cut time is the limit based on whether you will get the price based on the previous day or the same day. Every mutual fund has a cutoff time to buy and sell. Market regulator SEBI has reduced the time to just that.
What will be the effect due to change in time:
Suppose you have taken a liquid fund or overnight fund whose cutoff time is 12:30 pm. If you have deposited till the cut off time then you will get the previous day's value or NAV. At the same time, if you have taken or deposited after the cut-off timing, then you get the same day's value or NAV.
If the investor submitted the redeem request before the cutoff or between the time, then the same day value or NAV will be available. If done after the cutoff timing, the next day's value or NAV is found. According to Sahil Arora, Director, Paisabazaar.com, "If the investor redeems from the fund, then the NAV will be received from the same day's transaction and if it redeems or purchases after the cutoff time, then the NAV will be fixed according to the next day's timing".
The cutoff of every mutual fund will be applicable as per the timing rules.
· SEBI has reduced the cutoff timings by two hours.
Should investors invest or sell in mutual funds according to cut-off timing?
If you want to invest or sell a large amount of funds, then you should invest keeping in mind the cutoff timing.
For long-term investors, cutoff timing has to be taken care of as the value of your fund / NAV is determined accordingly.
Small investors and those who invest in funds for short term need not worry about cutoff timing.
Small investors are not affected by the change in cutoff timing.
Investors do not have to panic when messages are sent by mutual funds. This decision has been taken by SEBI due to change in the timing of bank and fund houses due to lockdown. To know about any fund, get help from your investment advisor.
This post was published on May 1, 2020 11:49 pm
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