Entry Load And Exit Loads In Mutual Fund.
The cost of investing in Mutual Fund is dependent on the various charges, some fixed some recurring.As an investor, it is important to know what are entry and exits loads in Mutual Fund.Entry load is the charge that is levied by a Mutual Fund at the time of investing or buying a scheme.[It has been discontinued now.]. Exit load is the charge that a Mutual Fund levies during exiting or selling the units of the mutual fund.
Time Limit for Exit load in Mutual Fund
It may vary from different schemes.Most of the equity Funds have no exit load after a duration of one year, but many charge variable exit loads as per duration of 6 months, 01 year, 3 years etc. It is very important to read the offer document/scheme details of the Mutual Fund to check about the exit loads before investing or redeeming.Most of the liquid/debt Mutual funds do not levy exit loads, but it is always worthwhile to check for such details as many do.
How Is Exit Load Calculated?
Exit Load is calculated as a percentage of Mutual Fund Navand not of the total amount or corpus.When Mutual Fund units are sold during the exit load period then the value of the NAV of the redeemed unit is reduced by an amount which is the specified percentage of the exit load.
Does SIP Also Incur Exit Load, If yes Then How?
Yes, SIP also incurs Exit Load.but during redeeming of the final amount, each SIP incurs exit load separately as per duration of the amount invested.For this reason, The investor needs to take into account the time when the complete amount will be exit load free or withdraw only that amount of the corpus of SIP which is exit load free. As a rule, for SIP, It is first in first out for the amount when the money is withdrawn. let us look at the infographic to understand it better.As it can be seen, only that SIP amount, which has completed one year, is exit load free. This is only for understanding. The duration may differ as per the Mutual Fund scheme mandate.
As always, exit load is a very important aspect amongst various others to select a Mutual Fund or decide when to redeem.a thorough knowledge of the Exit load is very important for the same. always look at the scheme details for checking the exits load, duration, and amount.