What is exit load in mutual funds?

Exit load is a fee charged by a mutual fund when investors redeem their units before completing a specified holding period. It is designed to discourage short-term trading and ensure fund stability.

This charge is expressed as a percentage of the redemption amount. For instance, if a mutual fund has an exit load of 1% and an investor redeems ₹10,000 worth of units, ₹100 will be deducted as the exit load, and the investor will receive ₹9,900.

Not all mutual funds impose exit loads, and the charge varies across schemes. Details about the exit load, including the applicable period, are mentioned in the Scheme Information Document (SID) of the mutual fund.