Please clarify the minimum locking period for Mutual Fund. What is the normal penalty to close it before maturity? Is any fund available same as the liquidity for stocks. My query relates to equity MF to ensure liquidity from stock to MF and vice versa whenever required.
Hi @5LB5SW,
The minimum lock-in period for mutual funds can vary depending on the specific fund and its terms. However, itās important to note that the majority of mutual funds, especially open-end funds, do not have a maturity date and offer liquidity to investors by allowing them to buy or sell units at any time.
ELSS funds primarily invest in equities and have a mandatory lock-in period of three years. During this period, investors cannot redeem or sell their ELSS fund units. On the other hand Solution Oriented Schemes (SOS) are a category of mutual funds designed to meet specific investment objectives or goals. These funds have a specified lock-in period, which can vary depending on the fundās objective. For example, retirement funds may have a lock-in period until the investor reaches retirement age.
Apart from ELSS and SOS, in the case of equity mutual funds, which invest primarily in stocks, the liquidity provided by open-end funds can generally be considered similar to that of stocks. You can typically buy or sell equity mutual fund units on any business day when the stock market is open. However, itās important to note that while mutual funds offer liquidity, the actual settlement of funds after selling units may take a few days.
The exit load and its duration can vary between funds, so itās important to review the fundās documentation, such as the scheme information document (SID), to understand the specific penalties that may apply.
Hope this helps!
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