Importance Of Entry And Exit Load In Mutual Funds

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oi-Sunil Fernandes

Here is the importance of entry and exit loads in mutual funds.

By Sunil Fernandes

Updated: Thursday, June 8, 2017, 13:44 [IST]

Before you invest in mutual funds, the most important thing to understand is the entry and exit load. Each time you buy a mutual fund, there is a load that is called entry load.

However, entry load these days is very much rare, though exit load is very much in vogue. In general, most mutual funds charge an exit load of 1 per cent, if you sell the scheme before 1-year. This is because they incur various expenditure and also to discourage short investments by mutual funds.

However, there is one particular mutual fund that charges even more than 1 per cent. In most cases mutual funds do not charge any exit load, if the investor has invested for more than 1 year.

What happens in case there is an exit load is that it reduces your overallreturns. So, it is good that you become a long term investors, where you do not sell and buy frequently.

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