The directive of the Securities and Exchange Board of India (SEBI) that – in the event of the purchase of units of mutual funds (except liquid and overnight funds), the closing net asset value of the day will be applicable on which funds are available for use regardless of the size and time of receipt of such a request – has greatly worried small investors.
This is because the criteria for applying the net asset value on the day the funds are available for use are currently applicable to investments of Rs 2 lakh or more, while small investors investing a lower amount get the net asset value on the same day at the date of the request, provided that the requests are submitted before the cut-off time.
The cut-off time for buying and redeeming equity and debt funds (except liquid funds) is 3 p.m., while the cut-off time for buying liquid funds is 2 p.m.
By submitting a request within the cut-off time to purchase units of MF schemes for less than Rs 2 lakh, an investor obtains the allocated units at the net asset value of the date of the request, while investors investing Rs 2 lakh or more get the net asset value of the date the money is made.
To bring parity between small (investing less than Rs 2 lakh) and large investors (investing Rs 2 lakh or more), the market regulator SEBI had previously ordered that from January 1, 2021, the units be allocated to all investors, regardless of their size. investment, only after realization of the funds or at the net asset value on the day the funds become available for use.
Applicability of net asset value when realizing funds to make it difficult to invest in MF at a desired price
However, to provide relief for small investors for a while, the market regulator has postponed the implementation of the applicability of the net asset value for mutual fund transactions to February 1, 2021 for one month.
Thus, until February 1, 2021, small investors, investing less than Rs 2 lakh, can take advantage of same-day net asset value by submitting application forms before the cut-off time on a market down day.