Exit Load in Mutual Fund
What is an exit load?
An investor pays a small fee for the Asset Management Companies at the time of exiting or redeeming a scheme. This is called as exit load. It is also referred as commission to the fund house of pre-exit penalty.
How to calculate exit loads in Mutual Fund?
To calculate an exit load, let’s suppose a scenario. Suppose an investor A has bought 500 units of an equity scheme six months back. The scheme charges an exit load of 1 percent in case if the investor withdraws before one year. Due to a certain situation, he is forced to sell his equity share before one year. Let us consider the NAV is Rs 100. He will get Rs 99 per unit [Rs 100 – Rs 1] on redemption. The total amount which he will get will be (Rs 99* 500 units) Rs 49,500. His total exit load is equal to Rs 500.
How exit load affects the return on Investment?
If you are a SIP investor, then the exit load will be applied upon the agreed time frame of SIP instalment whether it’s one year or whatever. The same rule will be applicable to all the funds of an investor, invested during different points of time. Every fund house has its own exit load, so better to read the documents before investing in it. In most cases, the exit load is between 0.5% to 3%. The rate and lock-in time differ too. In case of short-term fund, the exit loads are for short duration between 60 to 120 days. The rate of redemptions may differ if the mutual funds are redeemed in different time frame.
Some of the best mutual fund without any exit load or zero exit load.
Here is the list of Mutual funds without any exit load or zero exit load.
- ICICI Prudential Nifty Index fund- Zero exit load
- DSP BlackRock Equal Nifty fund- Zero exit load
- IDBI Nifty Index Fund- Zero exit load
- IDBI Nifty Junior Index Fund- zero exit load
- Sundaram Smart Nifty 100 Equal Weight Fund
- UTI Nifty Index Fund – Zero exit load
How to invest in a mutual fund with a minimum exit load.
To invest in low risk mutual funds, an investor needs to follow these simple procedures:
- Sign in at Gulaq Account.
- Enter all your credentials regarding the amount of investment and period of investment.
- Gulaq make sure that your e-kyc process gets started in less than 60 seconds.
- Gulaq advisory will list out the mutual funds with minimum or zero exit load.
- Afterwards select the mutual fund and then write your amount in the given funds.
(NOTE: Login through your internet banking; listed amount will be deducted from your account.)
It’s always advisable for an investor that before making any investment, one must look upon the exit loads, as it may affect your returns.
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.