Fidelity Fund Management increased the entry load for all its equity funds effective January 1, 2009. The entry load has been hiked to 3% from 2.25%. The load will be applicable only to investment below Rs 5 crore for its five equity funds -- Fidelity Equity, Fidelity India Growth, Fidelity India Special Situations, Fidelity International Opportunities and Fidelity Tax Advantage.
Most Indian equity funds charge an entry load of 2.25%. The only exception is Reliance NRI Equity Fund which has an entry load of 3%. Besides Fidelity, 21 of 342 open-end equity funds charge an entry load of more than 2.25%. These are mainly the funds which invest abroad.
The entry-load charged to investors primarily goes towards cost of selling the fund i.e. paid as commission to the agents. This load increases your purchase price of a unit. For example, if the entry load is 3%, and the current NAV is Rs 100, then the purchase price will be Rs 103. An increase in the entry load (or any other charge) means that your fund manager needs to work harder in order to provide you with the same return on your investment.
Fidelity’s Indian business started in early 2005. Since then, it has been able to build a modest asset base and reasonable line-up of equity funds.
In January 2008, SEBI mandated change that investors who invest directly with a fund will be exempt from load.
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