UTI Mutual Fund is going all out to follow the best practices in the mutual fund industry. It is also removing the last vestiges of practices and procedures which made it look different when compared to other mutual funds. One such practice was that of charging an exit load in nearly all its equity schemes.
Most equity mutual funds levy an entry load in their schemes. It was only UTIwhich levied an exit load on its equity schemes. With effect from September 1, 2003 UTI MF had started charging an entry load in place of exit loads. Investors will now have to shell out 2 per cent of NAV to invest in most of UTI MF's equity schemes. This move reflects the transformation of UTI MF into a marketing-driven organisation where every effort is made to woo investors. UTIs distributors will also be happy as they will immediately get the load rather than having to wait for investors to redeem.
The exit load however remains in the form of a CDSC in the UTI Children's Career Plan and UTI Retirement Benefit Plan. Earlier there was no entry load in UTI Children's Career Plan. Instead, investors had to pay a CDSC of 4 per cent for redemption made within 5 years of investing and 2 per cent for redemption between five and ten years of investing. This has now been replaced with a 1.5 per cent entry load and a CDSC of which varies with the duration of the investment. In the case of UTI Retirement Benefit Plan the 2 per cent entry load has been reduced to 1.5 per cent and a CDSC remains.