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.
    • Related Articles

    • What is exit load?

      Exit Load is a fee or charge levied by an Asset Management Company when an investor redeems or transfers units from a mutual fund scheme. It's deducted from the Net Asset Value (NAV) and serves as a deterrent for premature withdrawal.
    • Is exit load a standard charge across all mutual funds?

      No, the imposition of Exit Load varies from one mutual fund scheme to another. While some schemes might charge it, others may not. It's vital for investors to thoroughly read the scheme's offer document to understand any applicable charges. For ...
    • What does redemption price mean in mutual funds?

      Redemption Price is the amount an investor receives when selling units of an open-ended mutual fund scheme. If there's no exit load associated with the redemption, then the redemption price will be equal to the NAV of the scheme. However, if there is ...
    • What does repurchase price mean in mutual funds?

      In the context of mutual funds, the repurchase price refers to the rate at which a closed-ended scheme buys back its units from investors. The repurchase price might be equivalent to the fund's Net Asset Value (NAV), or it could be slightly less if ...
    • What are Open-Ended Funds/Schemes?

      An Open-ended mutual fund schemes are available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. It allows investors to enter and exit the fund anytime after the NFO, whereas a close-ended fund ...