Mutual Funds: What should you know and how can you redeem them?

A perfect investment should always cater you a way out, in case you are not happy with its performance. Mutual Fund Redemption is a manner to make a graceful exit. If the fund is not performing as per your satisfaction, you can cash the units you own.

Yes, if you have a question How to redeem mutual funds online then you are at the right place. With hundreds of funds out there in the industry, it is a challenging choice for an investor to make decision regarding which mutual fund to pick. An even more challenging decision is to track the performance and make decision when and how to vend off the units. The fund manager invests such money in a wide array of equities, debt securities, assets and/or money market instruments. The final aim is to cater highest returns possible to the investors. However, dissimilar mutual funds have different rules and guidelines related to entering, exiting and redemption. So, investors have to keep these factors in mind when choosing a fund.

When is the right time to redeem or sell the fund?

The right time to sell or redeem mutual funds relies totally on investors’ financial goals. You might have invested a fund in a mutual fund for 10-15 years with a purpose of buying a house or financing your child’s wedding. It might also be a short-term goal like purchasing a car or an appliance. In case the investor is getting close to that time, you must sell the fund regardless of the state of the market. Another use case of redemption could be when a fund under-performs steadily for two or more years, and drops down in the accredited ratings.

How can you redeem mutual funds?

Once your reason for redemption is clear and finalized, just go ahead and redeem it using any of the below techniques.

  • Directly through AMC

If you have bought a mutual fund directly from Asset Management Company (AMC), then you can vend it off from their online portal itself. You can decide to sell some units or all as per your need. One can also conduct this procedure offline by visiting the AMC office. After giving out the request, you will receive the redemption amount through NEFT or via a cheque sent to the registered address. Typically the online mode is much quicker resulting in the amount getting credited in a day or two.

  • Via a trading or Demat account

If you have purchased mutual funds through a Demat account or trading account, then you should process your redemption too via the same. After completing the trading procedure, they form an electronic payout (NEFT or IMPS) against redemption request. In this way, you can attain the amount credited into same bank account registered with your Demat account.

 Conclusion

So, these were a few of the ways in which you can redeem or sell your funds. Since you have proper knowledge about everything now, you can make a decision for yourself.

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