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What is Exit Load?
We invest in Mutual funds with a long term investment perspective.
The fund manager too invests our money into securities that have long term growth prospects.
However, if we exit the scheme before the intended duration, it will force the fund manager to sell the underlying securities before they actually grow.
So, the concept of Exit Load was introduced where by an investor is forced to pay a penalty, sort of, if he does not stay invested for the minimum duration of the scheme.
How much will be the Exit Load?
The Exit Load will depend on the type of scheme and differs from one scheme to another.
For example, a liquid fund scheme was designed to give high liquidity of funds. So, you can invest today and sell tomorrow. So, they generally do not have any exit load.
Similarly, a bond fund or a short-term debt fund carries a 1% exit load if redeemed or switched out before one year.
For most equity-oriented equity schemes, it will be 1-year.
- Mutual Fund Units
- New Fund Offer (NFO)
- Net Asset Value or NAV
- Know Your Customer / KYC
- Expense Ratio
- Systematic Investment Plan and Compounding effect
- Systematic Transfer Plan (STP)
- Systematic Withdrawal Plan (SWP)
- SIP vs Lumpsum Investments
- Open-ended, Close-ended and Interval schemes
- DIRECT plan vs REGULAR plan
- GROWTH option vs DIVIDEND option