Hi Friends,
I need to know couple of things. In MF, there is exit load and expenses ratio. I entered into an MF with 50k value and it is now around 75k which means 25k profit within a year.
Now, I need to know, if I exit, what will be the exit load if 1% means. Is the 1% on 25k, or 50k or 75k?
And also expenses ratio is included inside the NAV itself I believe. Please confirm these 2 points.
Thank you for the quick response Sir. Much appreciated:)
Hi Himalay,
I have another query somewhat related to exit load…
Let’s assume I started a SIP 25 months ago and want to redeem all now and there’s an exit load of 1% for an year, then how will this be calculated?
Should I need to redeem only 13 months value and wait for another 12 months to get rid of that exit load value and then redeem?
Thank you
The Exit load for a mutual fund is reduced from the NAV. Say, the current NAV is Rs.75/- so 1% of Rs.75 is Rs.0.75/- per unit.
When you redeem the units, the units will be redeemed at the NAV of 74.25 (75-0.75) per unit instead of the NAV of 75.
Exit load is calculated for each investment/SIP done and as per the exit load mentioned in the factsheet for the month, when the fund has been purchased.
Here is an example to understand exit loads and what happens when the AMC decides to change the exit load applicability of a scheme :
| Factsheet | Exit load |
|---|---|
| Jan-20 | 1% if redeemed before 1 year i.e 365 days from the date of allotment |
| Feb-20 | 1% if redeemed before 1 year i.e 365 days from the date of allotment |
| Mar-20 | 1% if redeemed before 1 Month i.e 31 days from the date of allotment |
| Apr-20 | 1% if redeemed before 1 Month i.e 31 days from the date of allotment |
| May-20 | 1% if redeemed before 1 Month i.e 31 days from the date of allotment |
The below units that were purchased are redeemed on 5th May
| Calculation/details | Rs. |
|---|---|
| NAV as on 5th May | 50 |
| Amount creditable before exit load ( 50 (NAV)* 253 units) | 12650 |
| Avg NAV = Total amount/no of units | 49.925 |
| Total exit load deducted | Rs.76 |
Below is the break down of purchase dates and exit load applicable as per the respective months factsheet.
| Purchase date |
Units allotted | Redemption date | No of days ( age) | exit load condition | Exit load | NAV ( post exit load deduction) | Amount ( units * NAV) |
| 1st Jan-20 | 50 | 5th May 2020 | 125 days | if redeemed <365 days 1% | 1.00% | 49.5 | 2475 |
| 1st Feb-20 | 52 | 5th May 2020 | 94 days | if redeemed <365 days 1% | 1.00% | 49.5 | 2574 |
| 1st Mar-20 | 48 | 5th May 2020 | 65 days | if redeemed <31 days 1% | Nil | 50 | 2400 |
| 1st Apr-20 | 53 | 5th May 2020 | 34 days | if redeemed <31 days 1% | Nil | 50 | 2650 |
| 1st May-20 | 50 | 5th May 2020 | 4 days | if redeemed <31 days 1% | 1.00% | 49.5 | 2475 |
| 253 | Total 253 units redeemed on May 5th 2020 | Total amount credited | 12574 |
The fact sheet is generally available on the AMC’s website. Refer to this link to know more about the read scheme related documents. You can refer to this link as well to understand more.
Yes, each individual investment that you do should cross 1 year of holding time, else the exit load will be applicable on the NAV of those particular units as explained in the example above.
Yes, the TER is deducted from the NAV of the scheme on a daily basis and is adjusted in the same.
Very nice explanation Neelesh ji…
