what is entry load? what is exit load?
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Answer Posted / abhit saini
I would like to correct Ms. Geeta over here. The exit load hasn't been called off by SEBI. You are right about the entry load. SEBI always believed that the true objective of mutual funds is ‘capital appreciation over the long term’.
So, by abolishing the entry load, it expected AMC's to either increase the exit load(i.e. the percentage), or extend the exit load time frames, forcing the investors to hold their funds for a longer period of time.
And SEBI was very much successful in this step, as most AMC's responded by making the necessary changes.
For e.g. among the larger fund houses, UTI Mutual for instance will charge an exit load of 1 per cent for most of its equity schemes, if the investor sells the fund within three years of its purchase. This cap was earlier one year.
In the UTI”s Retirement Benefit Pension Fund, the holding period to avoid exit load is as high as five years. Similarly, most equity schemes offered by AMCs such as Franklin Templeton India, Reliance, Fidelity, Bharti Axa and ING Vysya have upped the time limit for charging exit load to three years.
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