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What is an exit load in a mutual fund scheme?

AA penalty for not completing KYC
BA charge deducted from the redemption proceeds if units are sold within a specified periodcheck_circle
CThe annual management fee charged by the AMC
DA charge deducted at the time of purchasing units

Correct answer

B. A charge deducted from the redemption proceeds if units are sold within a specified period

lightbulbDetailed Solution

An exit load is a fee charged on the NAV when an investor redeems units before a specified holding period. It discourages early exits and offsets transaction costs. Entry loads have been abolished in India since 2009, so loads apply only on exit.

Reference: NISM Series V-A Mutual Fund Distributors, Chapter 5.

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