Exit load for Direct plans

POSTED BY Karthik ON February 13, 2013 10:25 am COMMENTS (13)

I have invested some amount in ‘UTI Opportunities Regular plan Growth option’ on March 2012 (mode : Direct) which has an exit load of 1% if redeemed before 1 year since investment.

I have switched this to direct plan ‘UTI Opportunities Direct plan Growth option’ on Jan 2013.

For calculating the exit load, how the period of investment be calculated? (if I want to redeem the full amount on April 2013)
does it start from the original date when I bought the ‘Regular plan’
or, the period of 1 year starts again when I swithced to ‘Direct plan’

Note: I am aware of the short term Capital gain taxes applicable for the Switch and future redemption (if done before completing 1 year after switch)

I believe there should be a common process for this and should be the same for all AMCs.
so, please avoid response like ‘Contact UTIMF’.

For friends who read this post for learning, below is a set of FAQs on direct plans (and, my question above is not covered there)

http://www.thehindubusinessline.com/features/investment-world/mutual-funds/faqs-on-direct-plan/article4302092.ece
http://www.thehindubusinessline.com/features/investment-world/mutual-funds/mf-direct-plan-and-nri-investor/article4348303.ece
http://www.thehindubusinessline.com/features/investment-world/mutual-funds/direct-plan-rules-across-fund-houses/article4397294.ece

13 replies on this article “Exit load for Direct plans”

  1. Dear Raj, thanks for the update.

    thanks

    Ashal

  2. Raj says:

    Most of the AMCs are not charging exit load if you are switching to Direct plan (if you have invested Directly to a Regular plan).

    Most of the AMCs are converting existing Regular Plan SIPs to Direct plans again if investing directly. UTI is an exemption – they don’t convert regular SIP to Direct Plan – atleast in my

    If you are a NRI be careful, STCG applies – and will be deducted at source.

    1. Karthik says:

      Raj,

      I had a SIP in ‘UTI Opportunities fund Regular plan – Growth’ started from Aug 2012.
      They moved my SIP to ‘UTI Opportunities fund Direct plan – Growth’ automatically starting Jan 2013. Don’t know why it did not happen for you.

  3. Dear Karthik, now only HDFC people can answer this thing. From the actual transactions done by you, yes the things look changed.

    thanks

    Ashal

    1. Karthik says:

      Ashal,

      In the account statement it clearly says the ‘HDFC Short term opportunities fund – Direct plan’ has 0.5% exit load when redeemed before 3 months. So, I believe the period is calculated (for exit load purpose, not for capital gains) starting from the day I invested in Regular plan, not the day when I swiched.

      Let me try switch out this UTI opportunities fund in March and see if they deduct the exit load. I am not happy with the ‘UTI opportunities fund’s performance in the last 7months’ bull run.

  4. Karthik says:

    I am still in doubt.
    I had some amount in ‘HDFC Short term opportunities fund – Regular plan’ (has 0.5 % exit load, if redeemed before 3 months).

    On 10th Jan 2013, I switched this to ‘HDFC Short term opportunities fund – Direct plan’. Recently (10th Feb 2013) I redeemed out a sum of 20k from this fund, but no exit load was deducted.

    So, there can be two possibilities
    1. The period is calculated starting from the day I invested in Regular plan (not the day when I swiched)
    2. HDFC does not charge exit load on ‘Direct plan’ of this fund.

    1. bharat shah says:

      as i know, if you have bought directly from HDFC AMC earlier (not through broker/adviser) , switch to new direct scheme (effective 010113) , they will not charge exit load as per the addendum , but if you have bought through broker/adviser, exit load for switch to new scheme would be applicable.

      1. Karthik says:

        Bharat shah,

        I know that the exit load will not apply for switching Regular plan (Distributor = DIRECT) to Direct plan.
        My question is how the exit load applies when we finally redeem the holdings from Direct plan.

        1. Raj says:

          Technically switch in date considered as day one of investment.

        2. bharat shah says:

          Karthik
          sorry. i could not properly understand your query. kindly up date here if you come across the correct rule in the matter.

  5. Dear Karthik, the money invested by you in March 2012 was in regular plan, which you redeemed in Jan 2013, so exit load as well as STCGs ‘ll be applicable on redemption amount.

    You invested the amount in Jan 2013 into Direct plan. So the holding date here is Jan 2013. Now if you do redeem in April 2013, the exit load as well as STCG ‘ll be charged again.

    FYI – The old regular plan (where you invested direct) & the current actual direct plan are 2 different plans & accordingly each has it’s own NAV & exit load & other things.

    Thanks

    Ashal

  6. direct plan and regular plan are treated as two different funds. Exit load applies if redeemed or switched within 1 year of date of transaction in the regular plan.

    If you had a sip then it applies wrt each sip transaction date.

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