Updated on March 10, 2023
A redemption price in a mutual fund is the price applied to fund units at the time of withdrawing them. It is usually same as the net asset value of the units at the time of redemption. This price decides the net returns that an investor will earn by withdrawing certain mutual fund units.
Is redemption price same as redemption fee?
No, redemption fee is the charge applied by a mutual fund when an investor redeems fund units held by him/her. This fee is also known as exit load.
Redemption fee is applied to prevent investors from exiting a mutual fund investment before it can start earning good returns. It encourages investors to remain invested for long term.
Why is it important?
Redemption price is important for investors as it will directly impact the returns that they generate from a mutual fund investment. Investors must check for the redemption price of a fund on the day of redemption and in case of any discrepancy, they must reach out to the fund house/AMC.