The Complete Guide to Mutual Fund Cut-Off Times and NAV Rules

If you invest in mutual funds, one operational rule impacts your returns more than market timing:

The Cut-Off Time Rule.

Most investors do not lose money because of fund selection.
They lose returns because they misunderstand NAV timing and settlement mechanics.

Let us break it down clearly.

1. What Is Cut-Off Time?

Cut-off time decides which day’s NAV you receive.

If funds are credited before the cut-off → Same applicable NAV.
If credited after → Next business day NAV.

However, NAV rules differ by fund category. Especially for liquid funds.

2. Equity Mutual Funds (Including ELSS)

Buy Cut-Off: 3:00 PM
Sell Cut-Off: 3:00 PM

NAV Rule: Funds must be credited before 3 PM to receive the same day’s NAV.
After 3 PM → Next business day NAV.

Redemption Settlement: Typically T+2 working days.

Example: Redeem Monday before 3 PM → Money usually credited by Wednesday.

3. Debt Mutual Funds

A. Liquid Funds — Different NAV Logic

Liquid funds follow a distinct rule.

They always apply the closing NAV of the previous business day.
You never receive the same day’s closing NAV.

Two key timing thresholds matter:

Regulatory Threshold: 12:00 Noon
• Before 12 noon → Previous business day NAV
• After 12 noon → NAV shifts forward by one more business day

Platform Cut-Off: Around 1:30 PM
This is operational, not regulatory. The 12 noon rule governs NAV allocation.

Sell Cut-Off: 3:00 PM
Settlement: Usually T+1
Some AMCs offer limited instant redemption.

Core takeaway: Liquid funds never give same-day NAV.

B. Other Debt Funds (Short Duration, Corporate Bond, Gilt)

Buy Cut-Off: 3:00 PM
Sell Cut-Off: 3:00 PM

Before 3 PM → Same day NAV
After 3 PM → Next business day NAV

Settlement: T+1 or T+2 depending on scheme.

4. Hybrid Funds

Buy Cut-Off: 3:00 PM
Sell Cut-Off: 3:00 PM

NAV Rule: Same day if funds credited before 3 PM
Settlement: Usually T+2

5. What Actually Determines Your NAV?

Not when you click invest.

It depends on:

• When funds are credited
• Regulatory cut-off timing
• Business day status
• Clearing timelines

UPI delays, bank processing, or overseas transfers can shift your NAV date.

6. Practical Scenarios

• Equity fund at 2:55 PM but funds credit after 3 PM → Next day NAV
• Liquid fund at 11:45 AM → Previous business day NAV
• Liquid fund at 12:30 PM → NAV shifts forward another business day
• Friday after cut-off → Monday NAV

Execution timing creates real return differences.

Quick Snapshot

Equity and ELSS
3 PM cut-off
T+2 settlement
Same day NAV if credited before 3 PM

Liquid Funds
12 noon regulatory threshold
Always previous business day NAV
T+1 settlement

Other Debt Funds
3 PM cut-off
T+1 or T+2 settlement
Same day NAV if credited before 3 PM

Hybrid Funds
3 PM cut-off
T+2 settlement
Same day NAV if credited before 3 PM

Why This Matters Even More for NRIs

Cross-border transfers, currency conversion delays, and time zone differences often shift NAV allocation unintentionally.

Understanding cut-offs is critical for liquidity planning and execution efficiency.

Final Thought

You cannot control the market.
You cannot control daily NAV movement.

But you can control execution timing.

And in mutual funds, execution timing quietly protects returns more than most investors realise.