Exit Load
Exit load is a fee charged by a mutual fund when an investor redeems their units before a specified holding period. It is expressed as a percentage of the redemption amount or the applicable NAV, and is designed to discourage short-term withdrawals.
Most equity mutual funds charge a 1% exit load if you redeem within 1 year of investment. If you redeem ₹1 lakh worth of units within that period, you pay ₹1,000 as exit load — you receive ₹99,000 net.
How exit load is calculated
Exit load is deducted from the redemption proceeds before the amount is credited to your bank account. The applicable exit load depends on when you invested, not when you redeem.
For SIP investors: each instalment has its own investment date and exit load calculation clock. Units purchased 14 months ago are load-free; units from 6 months ago may still attract the exit load.
Exit load across fund categories
Typically 1% if redeemed within 1 year. Nil after 1 year. Some multi-cap and sectoral funds have similar structures.
Liquid funds may charge a graded exit load (0.0070% to 0.0045%) on redemption within 7 days as per SEBI rules. Overnight funds typically have zero exit load.
Short-duration and ultra-short funds may have minimal or no exit load. Dynamic bond and credit risk funds may have exit loads of 1–2% for early redemption.
No exit load applicable — ELSS has a mandatory 3-year lock-in period, so redemption before lock-in is not permitted.
Cost of early exit
Exit load compensates the fund for the disruption caused by early redemptions.
Per-instalment clock
Each SIP instalment has its own exit load timeline, independent of other instalments.
Check before redeeming
Always verify the exit load period before redeeming to avoid paying an unnecessary fee.
How to avoid exit loads
- Plan your investments with the exit load period in mind — for equity funds, aim to hold for at least 12 months.
- For emergency liquidity needs, use a liquid fund or overnight fund that has zero or negligible exit load.
- Check the scheme information document (SID) for the exact exit load schedule before investing.
- Exit load is reinvested into the fund's NAV for the benefit of remaining investors — it is not collected by the AMC as profit.