In mutual fund which funds have locking period?
Mutual funds can have different types of locking periods, depending on the specific fund and the investment goals. The most common types of locking periods are as follows:
Closed-end mutual funds: These funds have a fixed number of shares and are traded on an exchange like stocks. They typically have a locking period, during which investors cannot redeem their shares.
Equity-linked savings schemes (ELSS): These mutual funds have a locking period of three years, during which investors cannot redeem their units. ELSS funds offer tax benefits under Section 80C of the Income Tax Act, which is why they have a mandatory lock-in period.
Fixed maturity plans (FMP): These mutual funds invest in debt securities with a specific maturity date. The maturity date of the securities determines the locking period of the fund, which can range from a few months to a few years.
Interval funds: These funds have a pre-specified interval during which investors can buy and sell their units. Outside of this interval, the fund is locked and no redemptions are allowed.
Close-ended hybrid funds: These funds have a mix of equity and debt investments and typically have a locking period ranging from three to five years.
It's important to note that the locking period can vary from one mutual fund to another, and investors should carefully read the scheme information document (SID) before investing to understand the terms and conditions of the fund.