What does Revised Exit Load Mean?

POSTED BY Ramprakash ON June 12, 2012 9:55 pm COMMENTS (5)

Almost everyday we get news on revised exit loads.

For eg. The exit load of ‘X’ Mutual Fund has been revised from June 20, 2012.

The revised exit load will be 3% if redeemed on or before 12 months of allotment, 2% if redeemed after 12. Presently, the fund charges an exit load of 1% if redeemed on or before expiry of 365 days from the date of allotment.

Now if I am an existing fund holder, will the revised exit load be applicable for me? Or will the revised exit load be applicable for new investors who purchase it after 20 June, 2012?

My reference is from debt fund perspective.

Thanks
Ramprakash

5 replies on this article “What does Revised Exit Load Mean?”

  1. Dear Ramprakash, If your holding period is able to surpass that exit load limit of holding, you are saved. Else just for holding period, there ‘ll be no difference for new or old investors. No matter you invested on 19th June 2012 or 21st June 2012.

    Remember holding period is important.

    thanks

    Ashal

    1. Ramprakash says:

      Thanks Ashal.

      I understand that holding period is important.

      But I am still NOT clear.
      Case1:
      In the above example, If the holding period is 365 days before 20 June 2012 and if I redeem then No exit load is applicable. This is Clear.
      Case 2:
      But if the holding period exceeds 365 days before 20 June, But I redeem on 21 June what is the exit load applicable. [0% as per old criteria, 2% as per new criteria]
      Case 3:
      If the holding period exceeds 365 days after 20 June (i.e. in 21st June), And I redeem on 22nd June what is the exit load applicable. [0% as per old critera, 2% as per new criteria]
      Case 4:
      If the holding period does NOT exceed 365 days And I redeem after 20 June, what is the exit load applicable. [1% as per old critera, 3% as per new criteria]

      1. Dear Ramprakash, here it goes –

        Case-2 – Exit load 2% as per new guidelines.

        Case-3 – Exit load 2% as per new guidelines.

        Case-4 – Exit load 3% as per new guidelines.

        Thanks

        Ashal

  2. BanyanFA says:

    Ramprakash,
    If you would read through the Revised Exit Load docs, it would clearly mention what would its implication be on you as an existing investor. Generally it would mention that the charges will be prospectively, i.e. applicable to the investors who purchased the units after the cut off date. Existing investors are not subjected to revise charge.

    I am pasting an excerpt from HDFC MF’s site for one example scheme “The aforesaid change will be applicable on a prospective basis from the date mentioned above in respect of investments made in HDFC Medium Term Opportunities Fund.”

    1. Ramprakash says:

      Thanks BFA.

      Where did you get the exit load doc from? AMC Website?

      I noticed the exit load changes on the consolidated statement sent by CAMS and on VRonline website. And these don’t mention anything about prospective/retrospective etc.

      I think its a grey area (atleast to me !).

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