Exit Load
A charge deducted from redemption proceeds when units are sold within a stated period of purchase.
Formula
Exit Load = Redemption Value x Load Percentage, applied if held less than the stated period
Unit
%
In depth
The load exists to discourage short holding periods, which force a fund to keep cash or sell securities at inconvenient times and impose costs on the investors who stay. It is typically 1% for redemption within a year in equity funds, and nil in most liquid and index funds. Loads apply on a first-in-first-out basis for SIP investments, so each instalment carries its own clock and a portion of a redemption can attract load while the rest does not. Entry loads were abolished in India in 2009, so any charge on the way in is not an exit load and should be questioned.
Worked example
Redeeming ₹2,00,000 within a year at a 1% exit load costs ₹2,000 and yields ₹1,98,000. On a SIP started 14 months ago, only the instalments from the last twelve months attract the load, not the whole redemption.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Exit Load” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.