What is Load of a Mutual Fund?

This is a fee that is charged when you buy or sell the units of a fund.

When you buy the units of a fund, you pay a percentage of it as a fee. This is known as the entry load. Let's say you are investing Rs 10,000 and the entry load is 2.25%. That means you pay Rs 225 as the entry load and Rs 9,775 is invested in the fund.

Now, let's assume you are selling the units of your fund. And the Rs 10,000 you invested initially is now Rs 15,000. Let's further assume the exit load is 2.25%. So you pay Rs 332 and get back Rs 14,668.

Generally, if funds charge an entry load, they will not charge an exit load or vice versa. But some of the funds also charge 0.5 to 1% exit load, only if the redemption is done within 6 months or an year. Normally Only one of the loads is charged.

There is also another type, ie., CDSC ( Contingent Deferred Sales Charge) an Exit charge payable by the Investor for a No load closed end scheme, but charged only if the redemption is done within the closed period.

Always, the load is refered as percentage of the NAV.

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