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What is exit load?

Mutual fund schemes mostly charge an exit load if an investor redeems or switches from a scheme before the completion of one year from the date of allotment

What is exit load? For example, what does exit load of one year mean while investing through a Systematic Investment Plan (SIP)? Is this period applicable for each fund or applicable only up to one year from the entering date on the concerned fund? Please clarify.
- Shakti

Mutual fund schemes mostly charge an exit load if an investor redeems or switches from a scheme before the completion of one year from the date of allotment. In the case of a Systematic Investment Plan (SIP), the same rule applies. Each installment of the SIP has to complete 12 months to escape the exit load. So, if you have done a five-year SIP, you will have to wait for six years to redeem the entire investment without paying any exit load. Or, you can redeem the units (accumulated over four years) that have completed 12 months and wait for the fifth year's installments to complete 12 months if you want to avoid paying the exit load.

The second part of your question is not clear. Do write again if you have any clarifications.

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