8.9What is an exit load?
1What is it?
An exit load is a fee charged if you redeem units before a specified period, e.g. 1% if redeemed within 1 year.
2Why does it exist?
It discourages short-term in-and-out trading that hurts long-term investors in the fund.
3Calculation
Exit load = Redemption value × load %
- Redeem ₹50,000 after 8 months; exit load 1% within 12 months.
- Load = ₹500 → you receive ₹49,500.
Wait past the exit-load period when possible.
4Quick revision
- Fee for early redemption.
- Typically 1% within 1 year for equity funds.
- Check the scheme document.
5Knowledge check
Q1. Redeem ₹20,000 with 1% exit load. Fee?Show answer
₹200.
Q2. Why do funds have exit loads?Show answer
To discourage short-term trading.
Q3. Do liquid funds have long exit loads?Show answer
No, only a small graded load for the first few days.