Mutual funds can deliver redemption proceeds in 10 business days

Usually, for equity schemes, this happens in 3 business days as a matter of routine practice


Is it the right time to buy equity-based funds in one shot or wait for a dip in the markets? Alternatively, should we start a systematic investment plan (SIP)? Sudhir Rana

Trying to time the markets is a tough ordeal in the best of times, and these are not the best of times in this regard. There are macro-economic events such as the US election results, advent of the Goods and Service Tax (GST), and the demonetisation that could impact the market in the near term. In historic terms, the current market appears to be slightly over-valued.

However, in the medium to long term, both the India specific factors are expected to have a positive impact on the economy in general and the earnings growth of companies in particular.

The big question amidst all this for an investor is if the equity market will choose to stay with the events or try to run ahead of it. Such a question always arises in such situations, although the actual events that influence this question may vary from time to time. If the market chooses to stay with the events, we might see a correction in the near term; but if the market chooses to look ahead and factor in the future potential in an optimistic manner, we will see a continued uptick in the stock prices and market valuation. So, the short answer to your question as to whether now is a ‘good time’ to invest lump sum or wait a while is: unfortunately, we don’t know for sure.

This is one of the principle reasons that financial advisers often recommend the systematic approach to investing. SIPs take the guess work out of the equation in terms of trying to enter the market at the right time. If you do have a lump sum in hand, you could invest it in liquid funds and then do systematic transfers into equity funds. In case you feel particularly good about the current market condition and, more importantly, if you are investing for a really the long term (7 years-plus at least), you can take a hybrid approach. Invest half of your amount as a lump sum now, and invest the rest in a systematic fashion over the next 12 months.

I am new to mutual fund investing. I would like to start by investing for 1 year. If I am satisfied with the returns, I will invest for the long term for specific goals. Is this a good approach? If yes, please recommend some funds to get started with. —Roshni Verma

I am sorry, but this is not a good approach. The reason is that if you base your conclusions about mutual fund returns based on 1-year returns, you are setting yourself up for disappointment later, one way or another. Equity markets (assuming you are talking about equity funds, as most regular investors do when they talk about mutual fund investing) on an average return about 12% a year over the long run. But rarely does this average happen exactly in any given year.

What happens is that the returns oscillate between large positive returns and low or negative returns on occasions, thus effectively averaging out to a decent 12% (post-tax) return. So, in the year that you are investing, you could get, say, a 20% return, or a -8% return. Neither of those figures will quite give you an indication as to what the subsequent year’s return is going to be or what the long-term average return would be.

A high return will give you false hopes and a low return could scare you away from the investment instrument.

The right thing to do would be to enter into the market and invest after building up a conviction about the long-term potential of mutual fund investing and invest for the long-term from the beginning. If you look at the historical returns from the market and mutual fund schemes, it is fairly easy to convince yourself that your experience is unlikely to be any different. If you start investing in this manner and stick to the routine, the likelihood that you will come out with healthy returns are indeed good.

What can one do if one has not received the redemption proceeds from the asset management company within the specified time period? Kanti Shah

Fund houses have up to 10 business days to deliver the proceeds of a redemption request in a scheme. Usually, for equity schemes, this happens in 3 business days as a matter of routine practice. For some international schemes, it could take up to the stipulated 10 business days.

In case an investor has not received the amount within this stipulated time, the first step would be to contact the asset management company (AMC) and ask for a clarification. It is possible that the attempt by the AMC to do a wire transfer of the amount to the investor’s bank account failed for some reason, and that it has mailed a cheque to the investor’s address.

If that is the case, you would need to verify that the address on the folio is current and valid. If the AMC is not able to provide a satisfactory explanation and resolve your issue, you should write to the regulator by lodging a complaint in the SCORES system (

Srikanth Meenakshi is co-founder and COO,

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