What is Exit Load in Mutual Funds & How to Calculate It?

Investing in mutual funds is a great way to grow your money but it’s important to know the rules and fees that come with them. One key factor to consider is the exit load — a fee that some Asset Management Companies (AMCs) charge when you sell or withdraw your mutual fund units before a certain period. Understanding this cost can help you make smarter investment decisions and avoid unnecessary charges. 

This space will help you understand the meaning of exit load in mutual funds and how to calculate it.

What is the Exit Load in a Mutual fund?

When you sell your mutual fund units early, Asset Management Companies (AMCs) may charge an exit load. It is a fee designed to discourage quick withdrawals and keep the fund stable. Selling before the set period can disrupt the fund’s balance, so this charge helps protect both investors and the fund.

The exit load is usually a small percentage of the mutual fund’s Net Asset Value (NAV), which is the total value of the fund’s assets minus its debts. When you sell your units, the exit fee is deducted and you receive the remaining amount. To know exactly how much you’ll get, you can use an exit load calculator.

What are the Exit Fees for Different Mutual Funds?

The fees vary based on the type of mutual fund, how long you have invested and fund rules. Some funds don’t have exit loads at all! 

Here’s a list of mutual funds that have exit fees:

• Equity Funds: Selling within a year usually comes with a 1-2% exit fee, which may reduce over time. If you are withdrawing within 6 months, then an exit fee of around 2% will be levied. After a year, it’s often free.
• Debt Funds: These low-risk funds may charge a small exit fee if you withdraw within a few months. Usually, if you withdraw within 2 to 3 months.
• Hybrid Funds: Since these are a mix of stocks and bonds, exit fees depend on the equity portion — higher equity means higher charges.
• Tax-saving Funds (ELSS): These have a strict 3-year lock-in period. Withdrawing early could come with penalties.
• Index Funds: Here, the fees vary but many don’t have exit charges. Always check the fund’s terms for this segment.

How to Calculate Exit Load in Mutual Funds?

Calculating the exit load in mutual funds is simple. It’s a small percentage of the fund’s Net Asset Value (NAV) at the time of withdrawal. 

Let’s understand this with an example:

• Suppose you invested ₹30,000 in January 2022 when the NAV was ₹100, giving you 300 units.
• If you withdraw after 4 months (May 2022), when the NAV has increased to ₹110, a 1% exit load applies.
• The exit load calculation in mutual funds works like this:

1. Exit fee per unit = 1% of ₹110 = ₹1.10 per unit
2. Total exit load = 300 units × ₹1.10 = ₹330
3. Final amount after exit load = (300 × ₹110) – ₹330 = ₹32,670

To easily sum this, you can use an exit load calculator to find out how much you will receive after deductions. 

In this above scenario, after the exit fee, you’d get ₹32,670.

The Bottom Line

Exit load is an important factor to consider when investing in mutual funds, as it varies based on the type of fund and holding period. Using a mutual fund exit load calculator helps you understand the fees before making a decision. 

If you need funds but don’t want to sell your investments, Fibe’s Loan Against Mutual Funds is a smart option. With instant approval, get access to cash up to ₹10 lakhs and pay only interest.

FAQs on Exit Load on Mutual Funds

Does every mutual fund have an exit load?

Some mutual funds do not have an exit fee. A few, like index or long-term investment funds, might not charge any closing fee. Always review the terms of the plan before spending.

Can I calculate the exit load before redeeming my units?

Yes, you can select the exit load before you sell your units. It depends on the fund’s value when you cash out and the exit fee amount.

Are there funds that offer zero exit load?

Yes, some mutual funds do not charge a leaving fee. These are usually long-term financial funds or specific kinds of index funds. Always check the plan information to know the exit load rules.