SWP redemption units are calculated using the previous trading day's NAV (T-1). The system determines the number of units to redeem based on this NAV before processing your withdrawal. Here's how it's calculated:
Redemption units = SWP amount ÷ T-1 day's NAV
When you set up a monthly SWP, the system calculates your redemption units using the NAV from the day before your scheduled withdrawal date. However, the actual redemption processes use the current day's NAV (T day).
Example scenario
If you have a monthly SWP of ₹500 scheduled for the 5th of each month:
- The system calculates units using the 4th's NAV (T-1 day)
- If the NAV on the 4th is ₹15: Redemption units = ₹500 ÷ ₹15 = 33.33 units
- You place a redemption order for 33.33 units on the 5th
- The actual redemption process uses the 5th's NAV (T day)
Things to keep in mind
- For schemes where the NAV is updated only after 12:45 PM (such as international funds and funds with international underlyings), the T-1 day’s NAV is not available when your SWP is triggered at 10 AM. In such cases, the system uses the T-2 day’s NAV for the unit calculation instead of T-1.
- The final amount credited to your bank account may differ from your intended SWP amount because the calculation uses T-1 day's NAV, while the actual redemption uses the T day's NAV. You receive more if the T day's NAV is higher, and less if it is lower.
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This difference is particularly relevant when using SWP amounts for STP investments. To avoid failed or delayed transactions, ensure you maintain sufficient funds in your bank account.