What does redemption price mean in mutual funds?
In mutual funds, the redemption price is the amount an investor receives when they sell or redeem units of an open-ended mutual fund scheme. It reflects the per-unit value an investor gets back and is closely tied to the scheme’s Net Asset Value (NAV) at the time of redemption.
If there is no exit load applicable, the redemption price is equal to the NAV. However, if the mutual fund scheme levies an exit load, the redemption price will be slightly lower than the NAV after accounting for that deduction.
Key points about redemption price
- Applicable mainly to open-ended mutual fund schemes
- Equal to NAV if no exit load is charged
- Lower than NAV when an exit load is applicable
- Calculated based on the NAV on the transaction (T) day
What if...
| Scenario | Explanation |
|---|
| You redeem during the no-load period | You'll receive the full NAV as your redemption price. |
| You redeem before the exit load period ends | The redemption price will be lower due to the load deduction. |
| You redeem after the cut-off time | NAV of the next business day applies, impacting the redemption value. |
| You hold units in a closed-ended fund | Redemption happens only at maturity or via stock exchange sale. |
To avoid lower payouts, always check the applicable exit load and redemption cut-off timings before placing a redemption request.
Last updated: 16 Jun 2025
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