Can We Sell Mutual Funds Anytime – How Does It Work?

Can We Sell Mutual Funds Anytime – How Does It Work?

The buying and selling of mutual funds are not the same as stocks, which is why mutual funds investors have certain doubts when they decide to sell or liquidate their fund holdings. One such question that most fund investors have is – Can We Sell Mutual Funds Anytime? In this article, we will answer this question so keep reading to find out.

Can We Sell Mutual Funds Anytime

To answer the question – Yes you can sell mutual funds on any business day. Your orders for the sale of your Mutual Fund units can be placed on any day but will be executed on the next working day.

But before you jump for joy you must understand what type of fund you have invested in and the withdrawal process (redemption). 

You can sell your mutual fund holdings at any time for an open-ended fund. This type of fund permits investors to redeem their investments on all business days. Investments in open-end schemes allow holders to redeem at any time, without a fixed lock-in. 

However, before selling your mutual funds, you must be aware of certain things that come up during and after redemption. 

For example, if you hold mutual funds that have a lock-in period of years, then the terms will clearly state why you cannot just redeem your investment at any time. 

Redemption Process

The process of mutual fund redemption is not the same as buying and selling shares directly. There are a lot of differences between the two and new investors shouldn’t confuse one for the other. 

Time Period

At the start of this blog, we mentioned that mutual funds and stocks aren’t bought and sold the same way. One of the first indicators of this statement is the time it takes to redeem funds vs. selling stocks.

Recently in Sept 2022, SEBI announced that it had reduced the mutual fund redemption time from 10 days to 3 days. So if you, the investor, wishes to redeem your mutual fund units today, you can expect the redemption amount to be credited within 3 working days.

Exit Load Fees

Mutual funds usually have an exit load fee when investors sell their units. This is a fee that is charged by the AMC, for redeeming or exiting a mutual fund scheme.

An exit load fee is mainly charged to discourage investors from redeeming their units prematurely. The exit load is charged as a percentage of the number of units held. The actual figure may vary for different funds. 

Another reason for charging exit load fees is to discourage the number of withdrawals from the scheme itself. Investors have the option of withdrawing only a certain number of units from their fund, and each time they redeem, an exit load is charged. 

Also Read: Which Is The Best SIP Date For Mutual Fund Investments?

In Closing

That is all for this blog. We hope it answers your question – Can we sell mutual funds anytime? If you have more questions regarding mutual funds, then head over to the Courses section of JoinFingrad and sign up today!

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