You can use your mutual fund units to generate liquidity
In the event of a need for funds, the unit-holder has the option to redeem the units or to borrow against them but the latter comes at a cost. The right option would depend upon the type of mutual fund units and their quality. “A loan against units is a good way to generate liquidity in an otherwise illiquid investment like a fund with a lock-in or a closed-end fund," said Santosh Joseph, CEO and founder of Germinate Wealth Solutions LLP. “For the retail investor if the asset is a long-term investment of good quality, then a loan against it which you should pay off as soon as possible is a better option than selling and being unable to build it back later. On the other hand, your portfolio will benefit if you choose to sell an investment and use the money to meet the need and redeploy into better investments," he added.