Exit load is one of the most important things one must take care of while withdrawing money from mutual funds.
Investors often complain about the exit loads, which is charged by asset management companies or AUM. But what exactly is exit load?
Some mutual fund schemes carry exit loads depending on when an investor withdraws money. It is mostly part of equity schemes, to encourage investors to invest for a long term.
If you look at the mutual fund fact sheet or any mutual fund page on Groww, the exit load is clearly specified for each scheme.
The above snapshot is from HDFC Balanced Fund. An investor will have to pay an exit load of 1% if he/she wants to withdraw money before a year. Likewise, you can check exit load for all the other funds as well.
Examples of Mutual funds Which Have Exit Loads.
|Mutual Fund||Category||Exit load|
|DSP Blackrock Equity & Bond Fund||Hybrid – Equity||If redeemed bet. 0 Month to 12 Months: Exit Load is 1%;
If redeemed after 12 Months: Exit Load is nil.
|Reliance Tax Saver (ELSS) Fund||ELSS||Nil|
|Mirae Asset Emerging Bluechip Fund||Equity Mid Cap||If redeemed bet. 0 Month to 12 Months: Exit Load is 1%;
If redeemed after 12 Months: Exit Load is Nil
|Franklin India Focused Equity Fund||Equity Multi Cap||If redeemed bet. 0 Year to 1 Year; Exit Load is 1%;
If redeemed after 1 year: Exit load is Nil.
|Quantum Tax Saving Fund||Equity Large Cap||Nil|
|Franklin India Low Duration Fund||Ultra Short Term Debt||If redeemed bet. 0 – 3 Months; Exit Load is 0.5%;|
|Aditya Birla Sun Life Corporate Bond Fund||Short Term Debt||Nil|
|Axis Liquid Fund||Liquid||Nil|
As you can see that different funds with different categories have different exit loads. Please note, that it is not necessary that all mutual funds in a category will have same exit load.
An investor must check out the exit load before investing in any mutual fund.
You may also refer to the below post to know about the other important parameters while considering a mutual fund:
How to Review a Mutual Fund in Just 5 Mins?
Apart from Exit load, one must consider the tax implications of withdrawing from a mutual fund.
You can read how returns on mutual funds are taxed here.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.