The directive of Securities and Exchange Board of India (SEBI) that – in case of buy of units of mutual fund schemes (except liquid and overnight schemes), the closing NAV of the day shall be applicable on which the funds are accessible for utilisation irrespective of the size and time of receipt of such application – has created the modest investors a worried lot.
This is since the criteria of applying NAV on the day on which the funds are accessible for utilisation is presently applicable on investments of Rs 2 lakh or more, though smaller sized investors investing lesser quantity get the very same day NAV on the date of application, supplied the applications are submitted ahead of the cutoff time.
The cutoff time for buy and redemption of equity and debt funds (except liquid funds) is 3 pm, though the cutoff time for buy of liquid funds is 2 pm.
On submitting an application inside the cutoff time for buy of units of MF schemes for significantly less than Rs 2 lakh, an investor gets the units allotted at the NAV of the date of application, though the investors investing Rs 2 lakh or more gets the NAV of the date on which the dollars is realised.
To bring parity amongst each modest (investing significantly less than Rs 2 lakh) and huge investors (investing Rs 2 lakh or more), market place regulator SEBI had earlier directed that from January 1, 2021, units will be allotted to all investors, irrespective of size of investment, only following the realisation of funds or at the NAV of the day on which funds turn out to be accessible for utilisation.
Applicability of NAV upon realisation of funds to make it tricky to invest in MF at a desired price
However, providing relief to modest investors for some more time, the market place regulator has postponed the implementation of NAV applicability for Mutual Fund transactions by one particular month to February 1, 2021.
So, till February 1, 2021, modest investors, investing significantly less than Rs 2 lakh, may well take benefit of availing the very same day NAV by submitting application types ahead of the cutoff time on a day of market place fall.