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.
| Particulars | Amount |
|---|---|
| Redemption 4 months after investment | Rs.100 (NAV) |
| Exit Load | 1% * 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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