I switched from HDFC Equity fund to HDFC Mid-Cap Opportunities fund. The redemption in HDFC Equity was done on a different date than the purchase of the HDFC Mid-Cap Opportunities fund. The purchase was done two days later and in the two day delay, HDFC Mutual Fund made a tidy sum by doing so. Is this permitted?
- Uday Ghosh
The time taken to receive dividends or repurchase proceeds by unit holders is stipulated by SEBI. According to them, a mutual fund is required to despatch the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unit holder.
Going by this rule HDFC AMC did no wrong if there was a two-day lag between the redemption in one fund and investment in another. Typically, it takes 2-3 working days for the redemption to reflect and subsequently the purchase to come into effect. While, your loss is understandable, there is nothing but your ill luck to blame. On a positive note, you can take semblance in the fact that the NAV appreciated and hope that your investments grow in HDFC Mid-Cap Opportunities fund.