Open-ended Mutual Funds allow investors to redeem their units after certain period at no cost. If an investor wishes to redeem his/her units before this stipulated period, an exit load is levied. Mutual Funds charge exit load if investors sell their investments before having completed a specified time in the fund. This is meant to discourage investors with short-term goals from investing into funds that require long-term holding period. Liquid funds usually don’t have an exit load.
Exit loads are charged as a percentage of the NAV if units are redeemed before a given time as mentioned in the Scheme Information Document. Say, a scheme has 1% exit load if investment is redeemed before one year. If the NAV of the scheme is INR
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