Mutual funds companies collect an amount from investors when they join or leave a scheme. This fee charged is generally referred to as a ‘load’. Exit load is a fee or an amount charged from an investor for exiting or leaving a scheme or the company as an investor.
The aim behind the collection of this commission at the time investors exit the scheme is to discourage them from doing so, i.e. to reduce the number of withdrawals by the investors from the schemes of mutual funds. Different mutual funds houses charge different fees as an exit load.
Also known as a “redemption fee”, “back-end load” or “contingent deferred sales charge”.
Source: Economics Times/ Investopedia
