How to Redeem Mutual Funds Online: Meaning & Charges

Mutual funds are a popular investment option for those who want an affordable and passive approach to investing. Whether you simply want to exit a fund or need liquidity to meet financial needs, you can opt to redeem your mutual fund units anytime, depending on the type of fund.

Let’s understand what redemption is in mutual funds, how to redeem mutual funds online, and the steps involved in the process.

What is Redemption in a Mutual Fund?

Redemption in a mutual fund refers to selling your mutual fund units back to the fund house or asset management company. When you invest in a mutual fund, you purchase units of the fund at the prevailing NAV (Net Asset Value), which is the price of one mutual fund unit.

In close-ended funds, your investments are locked in for a specific period of time, while open-ended funds can be bought and sold anytime. ELSS mutual funds carry a mandatory lock-in period of three years, after which investors can redeem their investments.

When you redeem a mutual fund, you sell those units back to the fund house at the prevailing NAV. The redemption price depends on the NAV of the fund at the time of redemption.

Types of Redemption in Mutual Funds

The following are two types of redemption methods available for mutual fund investors.

Full redemption

In full redemption, the investors sell all their mutual fund units to the fund house and the entire investment corpus is transferred to their bank account.

Partial redemption

In this method, the investor can sell a portion of their investment. The remaining units are left intact in the investor's account.

How to Redeem Mutual Funds Online:

Redeeming mutual funds online is a convenient way to sell your units without the hassle of physical paperwork. Follow the steps given below to redeem your mutual fund units online.

Log in

First, you must log in to your broker’s app or the investment platform you use to invest in mutual funds.

Select the Scheme

To select the scheme, go to your portfolio or holdings and choose the specific mutual fund you want to exit or withdraw from.

Choose Redemption Type

Select either Full Redemption or Partial Redemption. In case of partial redemption, enter a specific number of units or a specific amount you wish to withdraw.

Verify and Confirm

Review your bank account details and transaction summary, then submit the request by entering the OTP sent to your registered mobile number or email.

FAQs

What does redemption mean in mutual funds?

Redemption in mutual funds means selling your mutual fund units back to the fund house and withdrawing your investment corpus.

What is the difference between open-ended and close-ended funds for redemption?

The difference between open-ended funds and close-ended funds is that while open-ended funds allow you to redeem your units at any time, close-ended funds lock in your investments for a fixed period.

How do I confirm my online redemption request?

You can confirm your redemption request by reviewing your bank details and entering the OTP sent to your registered mobile number or email.

What should I check before redeeming my mutual fund units?

You should check for any applicable exit load fees, tax implications on your profits, and current market conditions before redeeming your mutual fund units.