Why is cutoff time important in mutual funds?
Although you can buy and sell mutual fund units throughout the day during office hours, there is a cutoff time during the day that determines which day's net asset value (NAV) your transaction would take. This is usually 3 pm for all schemes, except liquid and overnight schemes. If you submit your buy or sell application before the cutoff time, you get to buy or sell at the same day's NAV. Else, you get the next day's. For genuine long-term investors, a day's difference doesn't matter. But if you want to benefit from sudden and sharp market movements, then the deadline matters. Online distribution portals have advanced cutoff times to process transactions before the mutual fund's cutoff time.