What is an exit load, and when is it applicable?

What is an exit load, and when is it applicable?

What is Exit Load in Mutual Funds?

Exit Load is a fee charged by an Asset Management Company (AMC) when an investor redeems (sells) mutual fund units partially or fully before a specified holding period. The details of the applicable exit load and the minimum holding duration are clearly mentioned in the scheme’s Scheme Information Document (SID).

The purpose of charging an exit load is to discourage early withdrawals and to protect long-term investors from the impact of sudden redemptions.

Example:
 If a mutual fund scheme has a 1% exit load for redemptions within 1 year, and you sell ₹50,000 worth of units within 6 months, you’ll pay ₹500 as exit load.

Key Highlights:

  • Not all funds have exit loads. Many debt or index funds have zero exit load after a short period.

  • The fee collected goes to the fund, not the AMC, and helps maintain stability.

  • Exit loads typically apply to equity and hybrid funds with longer holding goals.

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