Exit Load in Mutual Funds: What Is It & How to Calculate it? (2024)

While investing in mutual funds, you may have come across the term ‘exit load’. You may have been advised to check it before you redeem a fund soon after investing in it. What is this exit load and why does it matter? Let’s understand.

What Is an Exit Load?

The exit load is a fee charged by a mutual fund company when investors redeem or sell their units before a specified period. The purpose of exit load is to discourage short-term trading and to compensate the fund for potential costs associated with the early redemption of units. By imposing a fee on early redemptions, mutual funds aim to protect long-term investors from the potential adverse effects of short-term trading activities.

Exit load is calculated as a percentage of the value of the units being redeemed and is deducted from the redemption proceeds. For example, if an exit load of 1% applies and an investor redeems Rs 10,000 worth of units, the fund will deduct Rs 100 as the exit load, and the investor will receive Rs 9,900 as the redemption proceeds.

It’s important to note that not all mutual funds charge exit loads, and the specific exit load structure can vary from fund to fund. The details of any applicable exit load, including the duration for which it is charged, are provided in the mutual fund’s offer document or scheme information document (SID).

How to Calculate Exit Load in Mutual Funds

To calculate the exit load in mutual funds, you need to first know the exit load percentage charged by the mutual fund scheme you are invested in. This information can be found in the mutual fund’s offer document or scheme information document (SID). Usually, exit loads are charged by mutual fund schemes if an investor exits the fund within one year. Let’s look at an example.

For example, you invest in a scheme that charges a 1% exit load for redemptions within 365 days from the date of purchase. You redeem 1,000 units of a scheme six months after your date of purchase. If the NAV is Rs 100, the exit load will be the percentage charged multiplied by the number of units multiplied by the NAV.

Exit load = 1% ✕ 1000 (number of units) ✕ 100 (NAV) = Rs 1000

This amount will be deducted from the redemption proceeds which get credited to your bank account.

1000 (units) ✕ 100 (NAV) – Rs 1000 (exit load) = Rs 99,000.

For this example, the redemption amount you will receive is Rs 99,000.

In the case of SIPs, each SIP installment is considered separately for exit load calculation.

Keep in mind that the exit load criteria may vary for different mutual funds and schemes.

Exit Loads on Different Types of Mutual Funds

Exit load criteria can vary depending on the type of mutual fund. Here’s a general overview of exit loads for different types of mutual funds.

Debt funds invest in fixed-income securities like bonds and government securities. Generally, debt funds have lower exit loads as compared to equity funds. For example, a debt fund may have an exit load of 0.5% if redeemed within 90 days.

Equity funds typically have a higher risk-reward profile and longer investment horizons. Thus, they usually have a higher short-term exit load to discourage early exits. Having said that, many equity funds do not charge any exit load, allowing investors to redeem their units without any fee.

Hybrid funds, including arbitrage funds, impose an exit load if you redeem your investment early. Some investors mistakenly believe that arbitrage funds are meant for very short periods, like overnight funds, and that there is no exit load when you exit. However, the truth is that most arbitrage funds do charge an exit load if you redeem within 15 to 30 days. Therefore, it’s advisable to have an investment tenure of one month or longer for arbitrage funds.


Knowing about exit fees is crucial for investors. It will help you to understand the profits you’ll make after paying all costs. Note that the specific exit load structure can vary from one mutual fund scheme to another. The details of exit loads, including the duration and percentage, are typically mentioned in the mutual fund’s offer document or scheme information document.

Thus, carefully review these documents and understand the applicable exit load fees before investing in any mutual fund.

Exit Load in Mutual Funds: What Is It & How to Calculate it? (2024)


Exit Load in Mutual Funds: What Is It & How to Calculate it? ›

Exit load meaning in mutual funds, can be understood as a percentage of the Net Asset Value (NAV) of the mutual fund an investor possesses. The Net Asset value is the net value of an entity and is calculated as the entity's assets minus the value of its liabilities.

How do you calculate exit load of a mutual fund? ›

Suppose you redeem 500 units of a scheme 4 months after your date of purchase. Let us assume that the NAV is Rs 100. The exit load will be = 1% X 500 (number of units) X 100 (NAV) = Rs 500. This amount will be deducted from the redemption proceeds which gets credited to your bank account.

What is the formula for calculating mutual funds? ›

How to compute your SIP mutual funds returns? SIP mutual funds returns work on the below formula: P [ (1+i)^n-1 ] * (1+i)/i where P is what you invest at periodic intervals, n pertains to the number of investments/payments and i is the rate of interest (periodic).

How is the NAV of an open end mutual fund calculated when is it calculated? ›

NAV is calculated by dividing the total value of all the cash and securities in a fund's portfolio, minus any liabilities, by the number of outstanding shares. The NAV calculation is important because it tells us how much one share of the fund should be worth.

How can exit load be avoided? ›

For most arbitrage funds, exit load on unit redemptions within a specific period normally ranges from 15 to 30 days. To avoid paying exit load in arbitrage funds, investors should consider holding units for one month or above.

How do you calculate total money exit? ›

Exit multiple is a very simple calculation. It is the total cash out divided by the total cash in.

Which are the best mutual funds to invest in 2024? ›

List of Best Retirement Funds in India for 2024 (as per 3Y Returns)
S.No.Fund Name3Y Return (Annualised)
1.ICICI Prudential Retirement Fund Pure Equity Plan Direct-Growth33.36%
2.HDFC Retirement Savings Fund Equity Plan Direct-Growth28.08%
3.ICICI Prudential Retirement Fund Hybrid Aggressive Plan Direct-Growth23.74%
3 more rows
3 days ago

What is the math for mutual funds? ›

The price per mutual fund share is known as its net asset value (NAV). The NAV is the net value of a fund's assets minus its liabilities (regular expenses), divided by the number of shares outstanding at market close.

What is a mutual fund calculator? ›

A mutual fund calculator is an online tool that helps investors calculate their returns and the future value of an investment based on a certain investment strategy.

How to calculate total return for a mutual fund? ›

How to Calculate Mutual Fund Returns?
  1. Absolute Returns. Formula: [(Current NAV – NAV at the time of purchase) / NAV at the time of purchase] × 100. ...
  2. Annualised Returns. Formula: Absolute Returns / Investment Period. ...
  3. CAGR. Formula: [(Final Investment Value / Initial Investment Amount) ^ (1/number of years invested)] – 1. ...
  4. XIRR.
Jan 9, 2023

Is it better to have a high or low NAV? ›

Dispelling Common NAV Myths

However, it has no bearing on how the fund will perform in the future. Similarly, some investors feel that investing in a fund with a lower NAV is the best option. The widespread consensus is that since the NAV is smaller, it has more room for future development.

What is an example of NAV calculation? ›

Mutual Fund Net Asset Value Calculation Example

For example, if a mutual fund's total holdings are valued at $100 million with liabilities of $20 million, the fund's NAV is equal to $80 million.

How do you calculate open-end fund? ›

Open-end funds

Net asset value is the market value of the fund's assets at the end of each trading day minus any liabilities divided by the number of outstanding shares. Open-end funds determine the market value of their assets at the end of each trading day.

What is an example of exit load? ›

For instance, if you decide to redeem 500 units of a scheme after 4 months from the date of purchase, assuming the Net Asset Value (NAV) is Rs. 100, the exit load would amount to Rs. 500. This sum is deducted from the redemption amount, which is then credited to your bank account.

Why is exit load charged? ›

The primary reason for levying exit load is to discourage investors from backing out and pulling out their investments before the lock-in period is over. Additionally, the exit load fee may also reduce the withdrawal numbers from the mutual fund schemes.

What is no exit load? ›

A No-Load fund is one that does not charge entry or exit load. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

What is the formula for front end load mutual fund? ›

Front end load is calculated using the formula: Front End Load Fee = Investment Amount x Front End Load Percentage. For example, a 5% load on an INR 100,000 investment results in an INR 5,000 fee.

Can I exit a mutual fund any time? ›

Can I withdraw money from mutual funds anytime? Yes, you can withdraw money from most mutual funds anytime, unless they have a lock-in period.

What is the exit fee of a fund? ›

An exit fee is a fee charged to investors when they redeem shares from a fund. Exit fees are most common in open-end mutual funds. Class C-shares are classes of mutual fund shares that carry annual administrative fees, set at a fixed percentage.

Which mutual fund does not have exit load? ›

Here are some mutual funds in India that have no exit load: Axis Bluechip Fund. ICICI Prudential Bluechip Fund. Aditya Birla Sun Life Frontline Equity Fund.


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