Mutual funds are professionally managed investment instruments that pool money from various investors to invest in a diversified portfolio such as stocks, bonds and money market instruments.
The Securities and Exchange Board of India (SEBI) regulates mutual funds in India to ensure investor protection and transparency.
There are different types of Mutual Funds in India such as Equity Funds, Debt Funds, Hybrid Funds, Index Funds and Sector Funds etc. Each type of mutual fund invests in a specific type of asset class and has its own risk-return profile.
Investors can invest in mutual funds in India through various channels such as mutual fund companies, online platforms and stock brokers. To invest in mutual funds, investors need to complete the Know Your Customer (KYC) process, which involves submission of proof of identity and address.
Mutual funds offer several benefits such as diversification, professional management, liquidity and convenience. However, they also carry market risk, and investors should carefully assess their risk appetite and investment objectives before investing in mutual funds.
How to withdraw your money (redeem your units) in Mutual Funds?
Mutual funds regulated by SEBI have set norms to ensure liquidity. Open ended schemes, which include a large number of schemes, provide liquidity as a key feature. Liquidity is the ease of converting or using an asset into cash.
Once the redemption is completed, the funds are transferred to the investor’s designated bank account within 3-7 business days of registering the redemption.
Redeem Mutual Funds: Online
Mutual funds can also be bought and redeemed online on the mutual fund’s website.
As per information available on the official website of Association of Mutual Funds in India (AMFI), you need to log-on to the ‘Online Transaction’ page of the desired Mutual Fund and log-in using your folio number and/or ID. Select the PAN, scheme and number (or amount) of units you wish to encash and confirm your transaction.
In addition, central service providers like CAMS (Computer Edge Management Services Pvt. Ltd.), Karvy etc. provide the option to redeem mutual funds purchased from several AMCs. You can download the form online or visit the nearest office. Please note that these agencies may not service all AMCs.
Redeem Mutual Funds: Offline
AMFI says that in order to redeem funds through offline mode, the unit holder has to submit a duly signed redemption request form to the designated office of the AMC or Registrar.
The redemption form has to be filled with details such as the name of the unit holder, folio number, name of the scheme along with scheme details, and the number of units to be redeemed (or the desired redemption amount). In addition, all the holders have to sign the redemption form. The redemption proceeds will be credited to the registered bank account of the first designated unit holder.
things to keep in mind
Two issues need to be kept in mind. One, some schemes may have an exit load period. In such cases, redemption before a certain specified period, say 3 months, may attract a nominal charge such as 0.5% of the property value. Fund managers impose such loads to scare short term investors.
Secondly, the AMC (Mutual Fund Company) may indicate what is the minimum amount for redemption. Investors are advised to read all the scheme related documents carefully before investing.
In case of any queries or difficulties with the redemption process, you may contact the customer support of the mutual fund company for assistance.
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