Have you ever been in a situation where you signed, sealed and sent out a mutual fund (MF) application along with the investment cheque, but a day later you find yourself wishing you’d rather have invested in a different scheme or at a different time?
The good news is that you can make your wish come true. It’s possible to unsubscribe from an MF scheme even after sending the application to the fund house. In fact, as long as the cheque you have issued for the scheme doesn’t get encashed, exit is possible.
When can the need arise?
News: In the light of new information on the fund or development in the industry, you may not find the scheme you subscribed to up to the mark.
Mis-selling: Often, MF agents or advisors sell funds without correctly analysing the investor’s need and risk appetite. If you happen to look at the documents carefully after the agent leaves and find a problem, you may change your decision.
Emergency: A situation may arise where you need to meet unforeseen expenses and wish to utilise the money you have allocated for the MF towards the same.
How to unsubscribe
You can ask your agent to withdraw the application. Alternatively, you may instruct your bank to stop payment for the cheque you have issued for the scheme. Banks take up to three days to clear a local cheque and seven days for outstation cheques.
Can subscription be avoided after units are allotted?
For an existing scheme, MF companies allot units the day you put in your application and generate a statement. Regardless of this, you can avoid subscribing to the scheme as long as the cheque you have issued is not encashed. When the cheque isn’t encashed, the fund house reverses the allotment of units and issues a new statement with the revised holding.
Cost you will bear
Withdrawing the application does not cost the investor but your bank may charge you for the stop payment instruction for the cheque. While some banks may not charge for stop payment, others may charge up to Rs 100.
While avoiding subscription to an MF scheme at the last minute is possible, it is always better to check your scheme before deciding upon it.