A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.
How often can I withdraw my money?
An investor has no restrictions on redeeming money from an open-door scheme. While in some cases there may be an exit load, which affects the final amount realized, all open-end schemes offer liquidity as a great advantage.
The decision to redeem is entirely at the discretion of the investor. There are no restrictions on the number of refunds or the amount to be redeemed. There must be sufficient units in the account to fund repayments. The schema documents usually indicate the minimum amount that can be redeemed.
Units subject to a pledge to a bank or institution cannot be repaid unless the pledge is removed. Refunds may only be limited in extraordinary circumstances, as decided by the Board of Trustees.
Closed schemes can only be refunded by the AMC upon expiration. However, they provide an avenue for liquidity – anytime before maturity – by selling shares on a recognized exchange.
Refunds can be made to;
- Investor Service Centres (SAIs)
- AMC Offices
- Official Transaction Acceptance Points (OPAT)
- Through an authorized online platform.