Exit Load
Exit load is a charge levied when an investor redeems mutual fund units within a defined period from purchase. It is expressed as a percentage of the redemption value and deducted from proceeds before crediting the investor's account.
How It Is Applied
Redemption Proceeds = Units x NAV x (1 − Exit Load %). For example, redeeming 100 units at NAV ₹50 with 1% exit load: gross ₹5,000, load ₹50, net proceeds ₹4,950.
Typical Structures
| Fund Type | Common Exit Load |
|---|---|
| Equity funds | 1% if redeemed within 1 year |
| Liquid funds | Tiered (0.007% to 0.045% for days 1–7) |
| Debt funds (short-term) | Often nil or minimal |
| ELSS | Nil (3-year lock-in applies) |
| Hybrid funds | Varies by scheme |
Where Exit Load Goes
Unlike entry loads (which went to distributors), exit loads are credited back into the fund's assets — benefiting remaining investors. This discourages short-term trading.
SWP and Exit Load
Under SWP, each instalment is treated as a fresh redemption. Exit load applicability depends on whether each tranche has completed the required holding period.
SEBI Regulations
SEBI caps the maximum exit load. Funds must disclose load details in the Scheme Information Document (SID) and Key Information Memorandum (KIM), and provide notice of any changes.