Article

No Load Mutual Fund
June 07 , 2012

Mutual fund load is one of the two expenses an investor must bear while investing in a mutual fund, the other one being expense ratio. Load is a sales charge that is charged by the distributor to make for the marketing and sales expenses.

Types of loads

Load may be front end/entry load or back end/exit load. Entry load is charged when an investor buys units in a fund. Exit load is charged if units are redeemed before a specified period. Entry load on mutual funds was abolished by SEBI in 2009. Instead a transaction charge of Rs 100 is charged at the time of buying for investments over Rs 10, 000, through a distributor.

Most funds do charge an exit load if units are redeemed before a specified time. For example, equity mutual funds typically charge 1% load if redeemed before 12 months. This fee is knocked off the returns and the balance amount is credited to the unit holder's account.

Typical loads on different fund categories

Mutual fund type

Entry Load

Exit Load

Expense Ratio

Liquid Funds

0.00%

0.25% if redeemed between 0-3 months

0.11%-2.0%

Liquid Plus Funds

0.00%

2% if redeemed before 12 months

0.15%-2.0%

Other Debt Funds

0.00%

0.1%-0.5% for various durations

0.2%-2.25%

Monthly Income Plans

0.00%

1% if redeemed before 12 months

0.25%-2.5%

Index Funds

0.00%

0.00%

0.5%-1.5%

Balanced Funds

0.00%

1% if redeemed before 12 months

1.5%-2.5%

Diversified and Sectoral Equity Funds

0.00%

1% if redeemed before 12 months

1.5%-2.5%

Equity Linked Savings Schemes

0.00%

0.00%

1.5%-2.5%

Gold

0.00%

1%-2% if redeemed before 6-12 months respectively

1.00%

No load funds and direct investment plan

No load funds do not charge entry load or exit load. Though there are no funds that can be called 'no load' funds in India, you can skip this charge totally if you invest directly with the fund house. This is called Direct investment. While filling the form you just need to leave spce for distributor code blank and indicate Direct along with name of scheme.

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