The mutual fund cut-off timing in India as fixed by SEBI

Mutual Fund Cut off Time- The performance of a mutual fund scheme is indicated through a change in its Net Assets Value (NAV). Since the market value of securities keeps fluctuating, the NAV of mutual funds that invest in these securities also changes every day. For this purpose, the Securities and Exchange Boards of India (SEBI) have prescribed Mutual fund cut off time to determine which days’ net assets value will be applicable to your trade.

Cut off Timing and NAV of Mutual Funds

NAV of mutual fund scheme gets declared at the end of the trading day after markets get closed. The net assets value (NAV) of a scheme establishes the price at which the units will be purchased or redeemed (sale).

The allotment of NAV depends on the timing of the purchase or redemption request. If the request for a transaction has been reached to the AMC before the cut-off time of a trading day then it will take NAV of the same day, otherwise, it will be of the next trading day.

When you invest in a mutual fund, cut-off timing determines whether you will get scheme units based on the same day’s NAV or that of the next day. Mutual Fund cut-off time also holds good even when you want to exit a scheme.

What is Mutual Fund Cut off Time in India

Except for liquid and overnight mutual funds scheme, the cut-off time for purchase of all other funds is 3 PM and that of liquid and overnight schemes is 1:30 PM, while the cut-off time for all MF schemes including liquid and overnight schemes is 3 PM.

Here is the chart for different mutual fund cut off time in India.

Fund TypeCut-off Time Submission (Purchase)Cut-off Time Redemption (Sale)
Equity Funds3.00 PM3.00 PM
Debt Funds3.00 PM3.00 PM
Conservative Hybrid Funds3.00 PM3.00 PM
Liquid Funds01:30 PM3.00 PM
Overnight Funds01:30 PM3.00 PM

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Why Cut-off timing Important?

Investors trading in a large volume of money depends on even marginal per unit gains. For long-term investors, cut-off timing does not play a very crucial role but for short-term investors, it matters a lot. On the other parts, for investing a small sum of money it does not largely influence the profitability of the investment.

The accuracy in setting cut off timing makes sense only when there is a foolproof mechanism of capturing the time at which the sale and re-purchase applications are received. This is ensured through the time-stamping mechanism. Thus, understanding cut-off timing makes it easier for investors to make an informed decision.

Frequently Asked Questions- FAQs

  1. When should I buy mutual funds timing?

    When you invest in a mutual fund, cut-off timing determines whether you will get scheme units based on the same day’s NAV or that of the next day. Mutual Fund cut-off time also holds good even when you want to exit a scheme.

    Mutual Fund cut off time in India- Except for liquid and overnight mutual funds scheme, the cut-off time for purchase of all other funds is 3 PM and that of liquid and overnight schemes is 1:30 PM, while the cut-off time for all MF schemes including liquid and overnight schemes is 3 PM.

  2. What is the cut-off time for mutual funds in Zerodha?

    Except for liquid and overnight mutual funds scheme, the cut-off time for purchase of all other funds is 3 PM and that of liquid and overnight schemes is 1:30 PM, while the cut-off time for all MF schemes including liquid and overnight schemes is 3 PM.

  3. Can we invest in mutual funds on Saturdays?

    No, you can not invest in mutual funds on Saturdays because it is not a trading holiday as per SEBI holiday calendar and also on weekdays you can invest in mutual funds between the specified timing. Except for liquid and overnight mutual funds scheme, the cut-off time for purchase of all other funds is 3 PM and that of liquid and overnight schemes is 1:30 PM, while the cut-off time for all MF schemes including liquid and overnight schemes is 3 PM.

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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.

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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)

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