Understanding the Concept of Entry Load in Mutual Funds

What is entry load?

Entry Load is a fee that investors pay at the time of purchasing units of a mutual fund scheme. It is an upfront charge deducted from the investment amount, implying that a part of the investment goes towards this fee and the remaining is invested in the fund. This load essentially covers the distribution costs.

For instance, if an investor invests ₹10,000 in a fund with a 2% entry load, ₹200 will go toward the fee, and the remaining ₹9,800 will be invested in the fund. It's worth noting that the Securities and Exchange Board of India (SEBI) banned the practice of charging entry loads from 2009 onward.

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