What is Entry Load? Definition of Entry Load, Entry Load Meaning - The Economic Times (2024)

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What is Entry Load? Definition of Entry Load, Entry Load Meaning - The Economic Times? ›

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. Description: Generally, an entry load is collected to cover costs of distribution by the company. Different mutual funds houses charge different fees as an entry load.

Entry Load

This is a charge or commission given by the investor at the time of the initial stage of investment purchase to the mutual fund company. The entry load is usually deducted from the investment amount, reducing the quantum of investment. An entry load is charged to cover the company's distribution costs.

Entry Load is the charge levied at the time of investing and can vary between 1% and 3%. Getty Images. 3/5. PMS management charge. Management charge is the recurrent charge levied every quarter by the PMS and ranges from 1% to 3%.

Initial charge

Sometimes called the 'entry charge', this is an upfront charge paid when you invest money in a fund and is deducted from your investment before you invest. This covers the costs of setting up your investment, such as administration and marketing costs.

A load is a sales charge or commission charged to an investor when buying or redeeming shares in a mutual fund. Sales charge commissions can be structured in a number of ways. They are determined by the mutual fund company and charged by mutual fund intermediaries in mutual fund transactions.

Entry load is charged at the time an investor purchases the units of a scheme. The entry load percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of redeeming (or transferring an investment between schemes).

Mutual fund firms used to charge a sum from investors as enter a scheme. This fee is referred to as a “load” in general. It may be assumed that the entry load is the volume or cost paid by an investor when entering a system or joining the business as an investor.

Entry loads are charges that are calculated as a percentage of the net asset value. That is, assuming that the NAV is 10 rupees and the entry load is1% then the per unit price will be 10.1 rupees.

Most PMS schemes levy profit-sharing charges over and above the fixed fees. Normally, the way these PMS charges work is that the PMS service provider guarantees a basic profit.

While previously the exit load was structured as 3, 2, 1% for 1st, 2nd and 3rd year respectively, from February 1 ASK has set in place a flat exit load of 1% for 0-3 years. There will be NO exit load from 36th month onwards.

What is a good exit load? ›

The best exit load for a mutual fund is one that is low or non-existent. The exit load is a fee charged by mutual funds when an investor sells or redeems their units before a certain period of time has elapsed. It is usually a percentage of the Net Asset Value (NAV) of the mutual fund units held by investors.

A reasonable expense ratio for an actively managed portfolio is about 0.5% to 0.75%, while an expense ratio greater than 1.5% is typically considered high these days. For passive funds, the average expense ratio is about 0.12%.

Investment management fees for exchange-traded funds (ETFs) and mutual funds are deducted by the ETF or fund company and adjustments are made to the net asset value (NAV) of the fund daily. Investors don't see these fees on their statements because the fund company handles them in-house.

Mutual fund companies collect an amount from investors when they join or leave a scheme. This fee is generally referred to as a 'load'.

An electrical load is simply any component of a circuit that consumes power or energy. In a household setting, the most obvious examples of electrical loads include light bulbs and appliances.

Consider No-Load Funds to Avoid Sales Charges

That means you don't have to worry about fees shrinking your initial investment upfront. But there are some other fees you may pay that can detract from your returns. For example, you may pay a redemption fee to redeem your shares.

“When entry loads were there, distributors used to nudge investors to churn a lot. That was the main reason why entry loads were abolished.

Brushing aside opposition from fund houses and distributors, the Securities and Exchange Board of India (Sebi) today decided to ban entry load for all mutual fund schemes from August 1.