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Rohan Saha
Founder - Burn Inves... • 1d
When I first mentioned MF trading, I didn't fully grasp how it worked. But after diving deeper, I found it's a lot more popular than I initially thought. Many HNI and institutional investors actively use this strategy, which you can spot if you pay attention to mutual fund inflows and outflows. But here’s the catch: MF trading isn't all smooth sailing. The biggest downside, in my view, is how NAV is calculated. Unlike stocks that trade in real-time, mutual fund NAV is locked in only at the end of the trading day, typically after 2 PM. This means if you buy in when the Nifty 50 is down 1%, but the market bounces back by the close, your order is processed at the higher NAV, not the dip you were hoping to catch. That timing gap can be a real dealbreaker. But why do HNIs still love it? One word liquidity. When you’re moving serious money think crores, not thousands trying to fill a massive order in the regular market can be a nightmare. It might not get fully executed, leaving you partially invested. Mutual funds, on the other hand, handle these chunky investments much more smoothly. A little side note: someone I was talking to even hinted that a few traders might use this strategy to manipulate the market, but that’s a different conversation. Bottom line: it’s not a one size fits all approach, but if you understand the risks and know how to time your moves, MF trading can be a powerful part of your portfolio.
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