Entry load and exit load in Mutual fund
A Load Fund charges a percentage of NAV for entry or exit

It can be referred to as the commission to AMCs or the exit penalty
Before talking about entry load and exit load in Mutual funds, it is required to know what this load is. Mutual funds are known for a higher return with low risk and are the best deal for the long run. It is primarily because a team of sales intermediaries like a financial planner, broker, or the investment advisor manages the fund and generate returns. Trained fund managers plan investments, which diversifies the overall portfolio on your behalf. But everything comes at a cost. So, as an investor, you have to pay the fee for the service you receive. This fee is known as ‘load.’ It is integral charges linked with mutual fund investments.
The asset management companies (AMCs) charge this particular sum or load from the investors to cover their distribution expenses, administrative costs, operational costs, and other transactional charges. Whenever you buy a mutual fund or exit from a scheme, mutual fund companies collect this amount from you.
What is a load or no-load fund?
A Load Fund charges a percentage of NAV for entry or exit and the load structure of a scheme has to be disclosed in its offer documents. A no-load fund doesn’t charge for entry or exit. It means the investors can enter the scheme at NAV and there are no additional charges on purchase or sale of units.
What are the types of load?
This load is primarily of two types, the entry load and the exit load. The amount or fee charged from an investor while entering a scheme or joining the company as an investor is called Entry Load. On the other hand, the exit load is a fee or an amount charged from an investor when he exits or leaves a scheme or the company as an investor.
What is Entry Load?
Entry Load is a percentage levied on the purchase of a mutual fund scheme that is deducted from the amount invested by the investor into the scheme reducing the quantum of investment. In another way, it can be said that investors purchase a mutual fund scheme at the net asset value (NAV) of the scheme plus the entry load.
An entry load is collected to cover the distribution costs of the company. It varies as per different mutual funds houses. In India, usually, this charge was around 2.25% of the value of the investment.
However, from August 2009, SEBI has mandated that no entry load can be charged in India for any mutual fund scheme to give relief to the investors. This step has not only affected the distributors in the mutual fund industry severely but also affected the mutual fund industry as a whole.
What is Exit Load?
The mutual fund houses collect exit load at the time investors exit the scheme, or they redeem units of a fund before the stipulated period. It can be referred to as the commission to AMCs or the exit penalty, which is charged when an investor exits the fund in the lock-in period. Usually, it is a percentage of the Net Asset Value (NAV) of the mutual fund units held by investors. After the AMC deducts the exit load from the total NAV, the remaining amount gets credited to the investor’s account. The investor, who completes the agreed fund tenure, will not be charged the exit load at the time of redemption.
Sometimes investors fail to stay invested for the period for which they had agreed. Exit load mainly applies to discourage investors from prematurely exiting the scheme. Leaving the scheme by the investor means a reduction in the amount of funds of the scheme of mutual funds. This fee may help reduce the number of withdrawals from the mutual fund schemes.
In India, different mutual funds houses charge different exit loads, and currently, the exit load charged is credited to the scheme. However, not all funds levy an exit load. In a no-load mutual fund, investors can buy or redeem shares after a certain time without any sales charge or commission. Still, most no-load mutual funds levy a particular charge if an investor redeems units early. And in case of open-ended funds, the investors may choose to exit the scheme as and when they want.
There is another type of exit load called Contingent Deferred Sales Charge or CDSC. This exit load depends on the term of the investment. If the investment is for a long-term, lower is the exit load. However, if the investor wants to make an early exit from the mutual fund investment, the exit load charged is substantially high and vice versa.
Why consider load before investing?
Investors must consider the loads as it affects the returns on their investments in a significant way.
For instance, if the exit charges for a one-year scheme is 2% and the NAV of the fund is Rs.35 during the time of redemption. If you redeem within six months, then the exit fee 2% of Rs.35 or Rs.0.7 will be deducted and the remaining Rs.34.30 gets credited to the investor.
From a regulatory point of view, mutual funds cannot increase the exit load beyond the level stated in the offer document. If there will be any modification in the loads, it will apply to future investments and not the existing investments. The mutual funds are allowed to make amendments regarding the change in loads in their offer document to keep the new investors well informed.
Difference between an entry and exit load
At present mutual funds do not charge an entry load while the exit load differs. The significant difference between them is that one is charged at the time of entry or buying a mutual fund scheme, while the other is charged at the time of selling a mutual fund scheme.
To conclude, while considering loads before investing, the investors should also consider the performance of a mutual fund and service standards because some good performing funds may have a higher load, but they also yield greater returns.
That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.
With this one can say “Mutual Fund Sahi hai”, so let me do Nivesh
Related Links:
- 10 Things to know before finding best mutual funds for SIP
- 11 Difference between stocks and mutual fund
- Are you prepared for your retirement?
- As an investor, what should you look into an offer document (OD)?
- Asset Allocation is Important
- Attaching goals while investing in mutual funds
- Balanced Mutual Funds in India
- Benefits of investing in mutual funds in India
- Conservative hybrid funds
- Difference between Exchange Traded Funds (ETF) and Index Funds
- Does Mutual fund provide risk diversification?
- Dynamic Asset Allocation Funds or Balanced Advantage
- Effects of Mutual Fund on Indian Economy
- Entry load and exit load in Mutual fund
- ESG funds (Environment, Social and Governance)
- Factors influencing the investments decisions of retail investors in Mutual funds
- Gilt free Gilt mutual Funds
- Gilt Fund with a 10-year constant duration
- How do you evaluate mutual funds’ performance?
- How mutual fund systematic transfer plans or STP work
- How side pocketing works in mutual funds?
- How single mothers can secure their children’s future
- How SWP from Equity Hybrid Funds can be useful to get regular return
- How to check your mutual fund KYC status online
- How to invest online in mutual funds in India
- How to start SIP in mutual fund?
- Hybrid Funds- to enjoy the best of both equity and debt funds
- In India how to invest in mutual funds
- Know about nomination in mutual fund schemes
- Know the advantages of starting your SIP early
- Let’s talk about Equity Linked Savings Scheme (ELSS) of Mutual Funds
- Let’s talk about Venture Capital Funds
- Low Duration Mutual Funds
- Medium Duration Mutual Funds
- MF is a retail product designed to target small investors, salaried people and others
- Mistakes to avoid while investing in mutual funds
- Mutual fund for children’s higher education
- Mutual Fund KYC How you can do
- Mutual fund past performance and consistency
- Mutual funds and Insurance plans
- Mutual funds for Beginners
- Penetration / Reach of Mutual Funds in Tier-3 Cities
- Regular mutual funds over Direct plans
- Selecting a mutual fund scheme
- Should I opt for SIP or bulk investment?
- Start online mutual fund SIP Investments
- Taking a loan against mutual fund investments
- The common myths about Mutual fund NAV
- The difference between Mutual Fund and ULIPs
- The different types of mutual funds in India
- The investor’s perception and preference towards Mutual funds
- The Mutual Funds in India
- The number of different schemes should one invest in?
- The role of a Fund Manager in the Mutual Fund scheme
- The working of Arbitrage Mutual Funds in India
- The working of Asset Management Companies in India
- Time is Precious
- Value Investing with Value Funds
- Various types of Equity Mutual Funds in India
- What are Banking and PSU Funds
- What are children’s funds
- What are Corporate Bond Funds
- What are Credit Risk Funds
- What are diversified equity mutual funds?
- What are Dividend Yield Funds
- What Are Dynamic Bond Funds
- What are Growth Schemes?
- What are income mutual funds or income schemes in mutual find?
- What are index funds?
- What are Interval Mutual Fund Schemes?
- What are large cap mutual funds?
- What are Liquid Mutual Funds?
- What are mid and small cap mutual funds
- What are Money Market Mutual funds?
- What are Multi-Asset Allocation Funds
- What are mutual fund debt funds?
- What are Mutual Fund Fixed Maturity Plans
- What are Mutual Fund Monthly Income Plans
- What are mutual fund tax benefits
- What are Offshore Funds?
- What are Overnight Funds?
- What are sectoral mutual funds?
- What are the benefits of investing in mutual funds versus directly in shares
- What are Top Performing Mutual Funds in India
- What are ultra-short term debt mutual funds?
- What happens to money invested, If a mutual fund scheme is wound up?
- What if a fund changes its strategy?
- What is a Fund of Funds (FoF) scheme?
- What is Equity Saving mutual Funds
- What is Floater Fund?
- What is Gold ETF
- What is NAV of mutual fund
- What is Retirement Fund
- What is SIP Top-up, and what are its benefits?
- What is tax saving mutual funds and how can it help create long term wealth
- What is the difference between an open-ended and close-ended scheme
- What should I do if fund’s poor results persist?
- When should you change your investment plan?
- Which is the best mutual fund according to your risk appetite
- Who and How are mutual funds regulated?
- Why should you consider Fund Costs?
- Why should you invest through Mutual Funds?
- Why should you monitor and review your fund
- Why SIP in Mutual Fund
- You Should Increase SIP Amount Now
- Alternative to Fixed Deposits