Although you can invest in a mutual fund (MF) on any business day of the year, you may not always get the same day's net asset value (NAV). Depending on what time you submit your application, you will be allotted the appropriate day's NAV. Now this could be the NAV of the same day, the previous day or the next day. There are separate rules for liquid funds and equity or debt funds. Here is a look at what the cut-off timings are.
If you invest in a liquid fund before 1:30 pm on a working day and also transfer the funds by that time, you will be allotted units of the scheme at the NAV of the previous day. And if you submit your application form and transfer the funds after 1:30 pm, you will get the units at the NAV of the same day. This cut-off time rule is meant only for liquid funds, and not for ultra short-term bond funds. You must remember that if you wish to invest in a liquid fund and want to get the desired NAV (either the previous day's or the same day's), then SEBI's rules state that investment money must be deposited in your mutual fund account before cut-off time. For instance, if you give your application before 1:30 pm to be eligible for the previous day's NAV, you must also deposit your money into your mutual fund's account by that time.
Equity and Debt Funds
For equity and debt funds, the cut-off time is 3pm. If you submit your application form before 3pm, you get the same day's NAV. If you submit later than this, you get the next day's NAV. Keep in mind though that these rules apply for applications below Rs 2 lakh. If you wish to invest Rs 2 lakh or more, you need to ensure that your money is in the fund house's account before the cut-off time, or else the time when your money is deposited will be considered when applying the cut-off timing rules.
What should you do?
It is good to know the cut-off timings of mutual funds, but there is no need to be unduly worried if you miss the day's deadline. It matters in the case of a liquid fund, or if it is a large amount and you need to either deposit or redeem the amount on a particular day. But by and large mutual funds are meant for the long run, so a day here or there won't make much of a difference in the long run.