Exit Load

Some Mutual Fund schemes charge an exit load on redemptions or cancellation within a stipulated time period.

Exit Load is like a penalty for premature redemptions because it is meant to discourage investors from selling their Mutual Fund investments too soon. Mutual Funds are not meant for short-term investments unless you are parking your surplus cash in a liquid fund. Since Mutual Funds are subject to market volatility, they are best suited for medium to long-term goals. Hence, most Mutual Fund schemes except liquid funds charge an exit load if investors sell their investment within the stipulated period.

Exit load is charged as a percentage and is applied on the redemption amount. If exit load is 1% then you’ll receive 99% of your redemption amount if you sell your investment before the stipulated period. Exit load as a percentage is applied on the NAV applicable to your redemption. If the NAV at the time of redemption is ` 100, you will receive only ` 99 for each unit of Mutual Fund investment you decide to redeem.