Now, we take a look at the exit load, exit load reduces the net income for the investor when the investor is trying to sell the mutual fund. So, we will see how this is calculated and what is the impact. Now, exit load is charged when the investor is selling his positions or units in a mutual fund. The AMC charges the entry load and instead loads to cover up all the distribution costs involved in selling the mutual funds. Exit load is generally zero. If the investor stays invested for a predefined period the predefined period when the exit load will become zero is always defined in the scheme document of the mutual fund.

It will be very clearly stated that if the mutual fund is invested in and stays invested for one year or three years, the exit load will be 01 needs to be very careful in studying this aspect To the scheme document, let us understand exit load through a few examples. First we take the case when there is no exit load, suppose the investor wants to sell 500 units in a mutual fund, the current nav of the mutual fund is rupees 20 per unit and the exit roll right back like we are reconsidering is not there then amount to receive is rupees 20 per unit into 500 units, which is equal to rupees 10,000. Next, we consider a case with a simple exit load structure. Suppose, the investor wants to sell 500 units in a mutual fund. The nav of the mutual fund at this point is rupees 20 per unit the exit load is 1% flat Then exit load is equal to 1% of rupees 20 which is equal to point two rupees or 20% then the nav applicable for the investor is rupees 20 minus 20% which is equal to 19.80 rupees.

So, the amount the investor will receive will be rupees 19.80 per unit into 500 units which is equal to rupees 9900. We now consider the case which is more close to reality then in this case also we will consider there is exit load. So, our situation is that the investor wants to sell 500 units in a mutual fund. The current nav of the mutual fund is two rupees 20 per unit. Now the exit load is 1% it redeemed within one year otherwise it is zero. Now, we consider the units were purchased on First January 2018.

Suppose the investor decides to sell the units on 30th of September 2018. That is to say, one year has not last, since the investor purchased the units. So, 1% exit load will be applicable in this case he receives rupees 9900 if the investor instead of selling on 30th of September 2018 sold on 30th of January 2019, one year would have passed and thus exhibit load would not apply. In this case he will receive the complete rupees 10,000. We will consider one last example. We have a situation similar to the last example, the investor wants to sell 500 units in a mutual fund.

The current nav is rupees 20 per unit. The exit load is one person divided in one year and otherwise none However, now Though we consider that 200 units are purchased on first January 2018, and 400 units were purchased on first March 2018. Let us consider the case when the investor is selling 500 units on 30th of Jan 2019 under these circumstances, so, for the first 200 units, there would be no exit load as one year has elapsed since the 200 units were purchased on first January 2018. For the remaining 300 units 1% exit load would apply because one year has not elapsed since first of March 2018. So, he will receive 5490 rupees for this remaining 300 units. So, the net amount receivable would be rupees 9940.

Now, exit loads can have complex destinations, one of one cell definition is provided here for your reference