What is mutual fund load?

Mutual fund load

Mutual fund load refers to the sales charge or commission charged by the Asset Management Company (AMC) when investors sell mutual fund units. It can affect the overall returns on mutual fund investments. Moreover, it’s important to note that the expense ratio of the fund does not include mutual fund load, meaning it is levied separately by the AMC subject to conditions.

Types of mutual fund load

Mutual fund load, by definition, is a charge incurred by the investor, thereby affecting the overall cost structure and returns on investment. Two primary types of mutual fund load are:

  1. Entry load (aka front-end load): It is a fee charged when investors purchase mutual fund units. It is calculated as a percentage of the total amount invested. However, in 2009, the Securities and Exchange Board of India (SEBI) banned AMCs from charging an entry load on mutual fund investments to protect investors from high sales commissions and promote transparency in mutual fund transactions.
  2. Exit Load (aka Back-end load): It is a fee charged when investors redeem or sell their mutual fund units. It is calculated based on the net asset value (NAV) of the shares being redeemed and is deducted from the redemption amount.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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