Unable to understand logic behind why there is no exit load on liquid fund
Is there any exit load in liquid fund?
Mutual fund houses have been asked to impose the same on investors, both institutional and retail, who redeem their liquid fund units within 7 days from purchase.
Background.
| Investor Exit Upon Subscription | Exit load as a % of the redemption process. |
|---|---|
| Day 1 | 0.0070% |
| Day 2 | 0.0065% |
| Day 3 | 0.0060% |
| Day 4 | 0.0055% |
How exit load will be calculated?
Suppose you redeem 500 units of a scheme 4 months after your date of purchase. Let us assume that the NAV is Rs 100. The exit load will be = 1% X 500 (number of units) X 100 (NAV) = Rs 500. This amount will be deducted from the redemption proceeds which gets credited to your bank account.
Is there exit load in open ended mutual fund?
In case of open-ended funds, the investors have the choice to exit the scheme as and when they want. Sometimes, investors fail to stay invested for the specified period for which they had agreed to invest in a fund. Hence, an exit load discourages investors from prematurely exiting the fund.
What are exit load charges?
An exit load is the fee AMCs (Asset management companies) charge the investor at the time of exiting or retrieving the units of the fund. The primary reason for levying exit load is to discourage investors from backing out and pulling out their investments before the lock-in period is over.
Why liquid funds are not performing?
Majority of the drop in returns of Liquid funds can be attributed to the fall in interest rates and it will reverse as soon as the RBI starts increasing the Repo rates.
Can liquid funds give negative returns?
These categories are Liquid, Ultra Short and Low Duration. During the recent equity market fall, the debt markets were also becoming volatile and it resulted in negative returns by these very short term debt fund categories.
Which mutual fund has no exit load?
HDFC Index Nifty Fund
HDFC Index Nifty 50 Fund is an index fund benchmarked against Nifty 50. The fund was launched in July 2002. Exit Load of 0.25% is applicable if redemption is within three days from the date of allotment. Exit load is nil after that.
Does NAV include exit load?
The Exit Load of a Mutual Fund is calculated on the Net Asset Value (NAV) of the fund.
How do I stop exit load?
Exit loads can be avoided if the investor smartly plans his or her sale of units. If investments are being made through systematic investment plans (SIPs), then an investor can choose to sell only those number of units that have been bought more than an year ago.
How is NAV calculated?
NAV is calculated by dividing the total value of all the cash and securities in a fund’s portfolio, minus any liabilities, by the number of outstanding shares. The NAV calculation is important because it tells us how much one share of the fund should be worth.
Is high NAV good?
So, a higher NAV simply means that the scheme’s investments have fared really well. Or the scheme has been around for a long period. The NAV only impact the number of units you may get. You will receive fewer units if you select a scheme with high NAV but the value of your investment will remain same.
What is a good NAV value?
Depending on its performance, the NAV would be higher or lower than Rs 10. Avoiding a scheme with a higher NAV is foolish because you are actually penalising it for performing better. NAVs of direct plans are higher than regular plans.