What is an Exit Load? How is it calculated?

Exit Load in mutual funds is the fee charged by a fund house if an investor exits a scheme partially/fully within a certain period from the date of investment.  For example, a fund charges an exit load of 1% for redemptions before 1 year from the date of investment

The exit load is usually a percentage of the NAV of the mutual fund held by investors and varies based on the fund; some do not charge any fee for exiting. If applicable, this information will be disclosed with the fund details.

For example, a scheme charges an exit load of 1% for redemptions within 1 year (365 days) from the date of purchase. You purchase 500 units and sell them after 4 months.

Redemption 4 months after investment
Rs.100 (NAV)
Exit Load1% * NAV * Quantity
= 1% *100 * 500
= Rs. 500
Amount Credited to Bank Account
(NAV * Quantity) - Exit Load
= (100 * 500) - 500
= Rs. 49,500

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