NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information
An investor in a close-ended equity scheme wants to exit before maturity. Which of the following is the usual route available to the investor?
The investor would usually sell the units on the stock exchange where the close-ended scheme is listed. Close-ended schemes do not allow daily redemption at NAV from the AMC, so exit before maturity depends on exchange liquidity, and the price may differ from NAV.
- ASell units on the stock exchange where the scheme is listedCorrect
- BRedeem units at NAV directly from the AMC on any business day
- CTransfer units to the trustees at face value
- DSwitch to the AMC's sponsor for a refund
Explanation
Close-ended schemes do not offer continuous redemption by the AMC. Units are listed on a stock exchange and can be sold there, often at a price different from NAV. Some close-ended schemes may also have a periodic repurchase window, but the common route is the exchange.
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