Mutual Fund FAQs: What is a load or no-load fund?

A

mutual fund

typically charges an amount from investors when they join or leave a scheme. This fee is generally referred to as a 'load'. Entry load can be said to be the amount or fee charged from an investor while entering a scheme or joining the company as an investor. In India, the entry load was usually of about 2.25 per cent of the value of investment. From August 2009, however, SEBI scrapped the practice of charging entry loads on applications to

mutual funds

. This means that if you invest directly with the fund house by submitting your application forms at any of its collection centres, you don't need to pay entry loads.

Similarly, exit load is a fee or an amount charged from an investor for exiting or leaving a scheme or the company as an investor. Generally, the exist load is charged to discourage investers to exit from the fund. The exit load fee can range between 1 to 5 per cent for different mutual funds houses.

Funds that can be purchased without a sales charge are called no-load funds. These funds are exactly the opposite of load funds. The shares of such a fund are sold without charging any commission or selling charge. The mutual fund company directly sells the funds to the investors without appointing any broker or agent. So, additional cost charged by the third party is eliminated.

READ MORE: What is mutual fund investment?
What is mutual fund?
Which is the best mutual fund to invest?
How to invest in a mutual fund?
How do mutual funds work?
What are the benefits of investing in mutual funds?
What are the different types of mutual funds?
What is mutual fund investment for beginners?
What is mutual funds and how to invest?
What are the mutual funds in India?
How is a mutual fund set up?
What is Net Asset Value (NAV) of a scheme?
What are sector specific funds/schemes?
What are tax saving schemes?