Exit load is a fee for redeeming your investments from a mutual fund. Mutual fund houses charge an exit load on certain mutual funds if you save before a stipulated period. For most mutual funds, exit load is charged only for a specified duration after which there is no exit load.
Exit load is charged by fund houses to discourage investors from hopping in and out of schemes. Different mutual fund schemes have different periods in which they levy exit loads.
But many mutual fund schemes do not charge any exit load, especially the debt mutual funds. Let us look into some of the debt funds without any exit load.
Criteria: We have picked the top five funds from equity and debt fund categories each, of which has the lowest exit load.
Disclaimer: This is not an exhaustive list of mutual funds with zero exit load. There might be other mutual funds that may also have minimal to zero exit load from debt fund or equity fund categories. This is also not a recommendation that exit load should be criteria before picking mutual funds for investment. The blog is only for informative purposes.
Whenever you decide to sell the units of mutual funds you own, an exit load may or may not be charged to you.
Here is the list of mutual funds with zero exit load.
| Debt Funds With Zero Exit Load |
| Aditya Birla Sun Life Liquid Fund |
| Axis Liquid Fund |
| Baroda BNP Paribas Liquid Fund |
| Edelweiss Liquid Fund |
| ICICI Prudential Liquid Fund |
| Source: Value Research |
| As of 16th March 2022 |
Liquid funds are the most popular category as debt funds with zero exit load. Here’s a list of liquid funds with the least exit load:
The exit load for this fund is 0.0070% if redeemed within 1 day, 0.0065% if redeemed within 2 days, 0.0060% if redeemed within 3 days, 0.0055% if redeemed within 4 days, 0.0050% if redeemed within 5 days, 0.0045% if redeemed within 6 days.The fund was launched in January 2013. The benchmark index of the fund is Crisil Liquid Fund Index.
The exit load for this fund is 0.0070% if redeemed within 1 day, 0.0065% if redeemed within 2 days, 0.0060% if redeemed within 3 days, 0.0055% if redeemed within 4 days, 0.0050% if redeemed within 5 days, 0.0045% if redeemed within 6 days. It is nil after that. The fund was launched in October 2009. The benchmark of the fund is the Nifty Liquid Index
The exit load for this fund is 0.0070% if redeemed within 1 day, 0.0065% if redeemed within 2 days, 0.0060% if redeemed within 3 days, 0.0055% if redeemed within 4 days, 0.0050% if redeemed within 5 days, 0.0045% if redeemed within 6 days. It is nil after that. It was launched in Feb 2009.
It is a scheme which invests in very short maturity (1-3 months) debt instruments providing returns, safety, and liquidity. The exit load for this fund is 0.0070% if redeemed within 1 day, 0.0065% if redeemed within 2 days, 0.0060% if redeemed within 3 days, 0.0055% if redeemed within 4 days, 0.0050% if redeemed within 5 days, 0.0045% if redeemed within 6 days. It is nil after that.
It was launched in November 2005. The exit load for this fund is 0.0070% if redeemed within 1 day, 0.0065% if redeemed within 2 days, 0.0060% if redeemed within 3 days, 0.0055% if redeemed within 4 days, 0.0050% if redeemed within 5 days, 0.0045% if redeemed within 6 days. It is nil after that.
| Equity Mutual Funds With No Exit Load |
| SBI Large & Midcap Fund |
| HDFC Index Nifty 50 Fund |
| HDFC Index Sensex Fund |
| Tata Banking & Financial Services Fund |
| Tata Infrastructure Fund |
| Source: Value Research |
| As on March 16, 2022 |
SBI Large & Mid Cap Fund aims to provide investors with opportunities for long-term capital appreciation by investing in diversified portfolios comprising predominantly large cap and mid cap companies.
The exit load of the fund is 0.1% till 30 days from the date of allotment and is nil after that.
HDFC Index Nifty 50 Fund is an index fund benchmarked against the Nifty 50. The fund was launched in July 2002. Exit Load of 0.25% is applicable if redemption is within three days from the date of allotment. The exit load is nil after that.
It is an open-ended scheme replicating/tracking S&P BSE SENSEX Index.The exit load of the fund is 0.25% till 3 days from the date of allotment and is nil after that.
The investment objective of the scheme is to seek long-term capital appreciation by investing at least 80% of its net assets in equity/equity-related instruments of companies in the banking and financial services sector in India. The exit load of the fund is 0.25% till 30 days from the date of allotment and is nil after that.
This is a fund that invests mainly in shares of companies engaged in infrastructure-related activities or is expected to benefit from them. The exit load of the fund is 0.25% till 30 days from the date of allotment and is nil after that.
Exit load is charged to compensate for your early withdrawal from the fund. The exit load on debt funds and equity funds should not be a criterion for decision-making.
A mutual fund expects you to stay invested for a long duration. If too many people redeem their money from mutual funds, the mutual fund manager’s decision-making is affected as the instability is too high.
Not only that but the investment of other investors also gets affected. Therefore, it is in the interest of the mutual fund and long-term investors to discourage people from redeeming too soon. The exit load is meant to act as a discouragement to people who wish to withdraw their money from a mutual fund.
The exit load is mostly higher for a short duration and lower for a longer term. In most cases, after a certain period, there is no exit load applicable.
When investing, there are various factors besides the exit load you must consider. Exit load isn’t one of the primary factors to consider. However, if you don’t wish to pay for an exit load on a debt mutual fund, you can pick a fund from above mentioned 10 debt funds.
But remember, avoiding exit-load mutual funds will prevent you from choosing good funds.
Mutual funds do an excellent job of handling and guiding your investments. If you want to invest in mutual funds for the short term, you should invest in debt mutual funds. These mutual funds have lower returns as compared to equity mutual funds, but they are also less risky.
Happy Investing!
To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS