The repurchase price is the cash you get for each unit you sell. It is the NAV minus any exit load. This is the final price and the only one that matters when you sell.
The repurchase price is what the AMC pays you when you sell a unit. It starts with the day’s NAV. Then, the AMC removes the exit load. If there is no exit load, the price equals the NAV.
Table of Contents
Understanding Repurchase Price
Repurchase Price Definition and Basic Concept
“Repurchase” means the AMC buys back your units. The price is the NAV for that day, minus any exit load. This system is fair to all investors.
Exit load money goes back into the fund. This protects long-term investors from short-term traders.
How Does Repurchase Price Work in Practice?
Here’s an example. Imagine the NAV is ₹100. The exit load is 1% if you sell within a year. Your repurchase price is ₹99. Selling 250 units gets you ₹24,750.
You must sell before the cut-off time to get that day’s NAV. If you are late, you get the next day’s NAV.
NAV vs Repurchase Price: Key Differences
- NAV is the true value of one unit of the fund.
- The repurchase price is the actual money you get for each unit you sell.
- When an exit load exists, this price is always lower than the NAV. If there is no exit load, they are the same.
Open-Ended Scheme Pricing Structure
With open-ended funds, you buy and sell any business day. The price is always based on NAV. Your buying price is the NAV. Your selling price is the repurchase price, which is the NAV minus any exit load. This is how it works.
Closed-Ended Scheme Repurchase Mechanism
You must sell closed-ended funds on the stock exchange. They trade just like stocks. Sometimes, the AMC offers to buy back units at a price based on NAV. When the fund ends, you get the final NAV.
Repurchase Price Calculation and Influencing Factors
Repurchase Price Formula and Components
Here is the only formula you need: Repurchase Price = Applicable NAV × (1 − Exit Load%)
- Applicable NAV: This is the NAV for the day your sell order is processed.
- Exit Load%: This is the fee for selling early. If you don’t have to pay it, this number is zero.
NAV-Based Calculation Method
The AMC calculates the NAV daily. They value all the fund’s stocks and bonds. When you sell, they use that day’s NAV and subtract the exit load. This gives you the repurchase price. They multiply that price by your units to find your total cash.
Exit Load Impact on Final Price
The exit load directly reduces the final price. It is very simple:
- If NAV is ₹10 and the exit load is 2%, your repurchase price is ₹9.80.
- If NAV is ₹47.3560 and there is no exit load, your repurchase price is ₹47.3560.
Exit loads usually decrease over time. You might pay 1% if you sell within one year but 0% after that. Funds like liquid funds have zero exit load.
What Factors Affect Repurchase Price Changes?
- Market Changes: When the stock or bond market moves, the NAV changes. This directly changes the price you get.
- Load Changes: AMCs can change exit load rules for new investments. This affects the price for those new units.
- SEBI Rule Updates: If SEBI changes how funds are valued, it changes the NAV. This also changes the final price.
- Fund Actions: Sometimes a fund takes special actions, like separating bad bonds (side-pocketing). This will affect the NAV and the price you get.
SEBI Regulations for Repurchase Pricing
Minimum Price Thresholds
SEBI rules protect you. The repurchase price cannot be much lower than the NAV. These are safety rules. Today, the system is simple: the sale price is NAV, and the repurchase price is NAV minus any exit load.
AMC Rights and Limitations
AMCs must follow all of SEBI’s rules. They must treat all investors the same. They cannot give special prices to anyone. All exit load money collected must go back into the fund to help the investors who stay.
When Can You Redeem Units at Repurchase Price?
- Open-ended funds: You can sell on any business day. The price is based on that day’s NAV.
- ELSS/lock-in products: You sell after the lock-in period ends, like 3 years for ELSS. The price is the repurchase price on that day.
- Closed-ended funds: You usually sell on the stock exchange. If the AMC offers a buy-back, the price will be based on the NAV.
- Payout timelines: You get your money in about two business days for equity funds. For most debt funds, it’s one business day.
FAQ
How is the repurchase price different from sale price?
The sale price is what you pay to buy units. It is always the NAV. The repurchase price is what you get when you sell units. It is the NAV minus any exit load.
What happens if there’s no exit load on my units?
If there is no exit load, the repurchase price is exactly the same as the NAV. This happens when the fund has no exit load or you have held your units long enough.
Can repurchase price be higher than NAV?
No. It is impossible. The repurchase price can never be higher than the NAV. It is either the same as the NAV or lower.
When do I receive money after unit redemption?
You get your money in about two business days for equity funds and one business day for most debt and liquid funds.
Why does repurchase price vary between fund schemes?
Every fund has its own NAV because each has different investments. Every fund also has its own exit load rules. These two things mean the final price will be different for every fund.
