What happens if a mutual fund scheme closes down

What happens if a mutual fund scheme closes down?

While mutual fund investments are typically long-term instruments, there are rare situations where a scheme may close down or wind up. If this happens, the fund house follows a regulated process to liquidate assets and return the proceeds to investors.

What does closing a mutual fund mean?

When a mutual fund scheme is closed, all of its investments are sold off (liquidated). The resulting funds are then distributed to investors, based on the number of units they held and the scheme’s Net Asset Value (NAV) at the time of closure.

  • NAV-based distribution: Investors receive payouts proportional to their unit holdings.
  • Deductions applied: Relevant expenses or legal costs may be deducted before payout.
  • Regulatory requirement: Fund houses are required to disclose the reasons and publish a final report to all investors.

What to expect during scheme closure?

  • You will receive a communication from the mutual fund explaining the reason for closure.
  • The closing process involves evaluating and selling all securities in the fund’s portfolio.
  • Once assets are liquidated, proceeds will be credited to your registered bank account.
  • A detailed closure report will be sent outlining the distribution method, NAV applied, and any deductions made.

What if?

ScenarioExplanation
You still see the fund in your portfolioIt may take time to update. Check Mutual fund section or statements for closure updates.
You haven’t received your payout yetAllow some time post-liquidation. Contact us if there’s no update after official closure.
You had an active SIP in the schemeIt is automatically cancelled upon scheme winding-up. No further deductions will occur.
You missed the closure email or SMSThe report is usually shared through multiple channels including your registered email and statements.
Keep your contact and bank details updated in your FYERS account to ensure timely payouts and communication during such events.

Last updated: 11 Jun 2025