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Are there any equity funds where I can invest 150000 and withdraw in 3 months with 0 exit load?

I want to invest 150000 for 3 months. Where can I invest so that I don't have to pay any exit load?

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2 Approved Answers

aniket

Exit load is a fee that the fund house charges to the investor when the investor redeems/sells his units. However, it is not always charged. The quantum of exit load, if at all charged, differs from one fund house to another. One of the factors that determine whether exit load will be charged or not, is the holding period.

Accordingly, most fund houses do not charge exit load if the equity fund is held for a period of more than one year. For example, investment in DSP Blackrock Balanced Fund is subject to 1% exit load if units are redeemed at any time before completion of one year from the date of purchase, and are not charged any exit load if units are redeemed after one year.

However, there are funds like Park Your Money - Safe Funds that do not charge any exit load, irrespective of the period for which the investment is made.

When levied, exit load generally ranges between 0.25-3% p.a.

If you stay invested in equity funds for a period greater than a year, the returns so earned will be exempt from tax. This will also help the investor to generate better returns due to absence of exit load as well as capital gains tax.

Therefore, a prudent investor must first read all scheme related documents carefully before investing and be fully aware of the repercussions of early exit before he can take an investment decision.

You can read more about penalties involved in withdrawing money from mutual funds here.

Though it is important to know the applicable exit load, whether or not a fund is subject to exit load should not dictate your investment decision. It should be made only after due consideratin of your investment objective, time horizon, risk appetite, etc. 

Ankit

An exit load is charged for investments made in Mutual Funds. If investments are made in liquid funds then no exit load is charged even if investments are withdrawn in 3 months.

Liquid funds are open end schemes that invest in securities with maturities of upto 91 days. Liquid Funds invest in treasury bills, money market instruments and very short term corporate paper. It allows investors to park their funds for a few days or months, avail the benefit of liquidity along with good returns. The returns can rise or fall depending on market rates of the instruments invested in.

Capital gains from liquid funds would now be added to investor's income and taxed at his marginal rate of tax, if invested for less than 3 years. However, this taxation is on par with bank FDs.

Following factors are to be considered:

  • Liquid funds offer better liquidity compared to Bank FDs. Bank FDs would penalize you for pre-mature withdrawal.
  • Liquid fund returns in the last three years have improved

If investments are made in equity oriented fund, then exit load will be charged if amount is withdrawn within 3 months. Moreover investing in equity oriented fund for 3 months is very risk and should be avoided. Investing in equity funds should be done for 3 years or more.

Liquid Funds are a good option to invest in for very short period of 3 months. 

Few good liquid funds are:

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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