Exit Load is a fee charged by mutual funds when an investor redeems (withdraws) their investment before a specified period.
Exit Load is imposed to discourage early withdrawals and encourage investors to stay invested for the recommended time horizon. It is usually charged as a percentage of the redemption amount if units are sold before a certain holding period.
For example, a fund may charge 1% exit load if redeemed within 1 year. If you withdraw after this period, no exit load is applied.
Key points about exit load:
Exit load is different from the expense ratio, which is an annual fee charged for managing the fund.
Investors should always check exit load conditions before investing, especially for short-term goals.
"If you invest ₹1 lakh in a mutual fund with a 1% exit load and redeem within the applicable period, you will pay ₹1,000 as exit load, receiving ₹99,000 (excluding market changes)."