Mutual Funds
What is a Load or no-load Fund?
A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads.
A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.
Advertisement
More from this specialization
- Where can an investor look out for information on mutual funds?
- Is the higher net worth of the sponsor a guarantee for better returns?
- Can an investor appoint a nominee for his investment in units of a mutual fund?
- Can a mutual fund impose fresh load or increase the load beyond the level mentioned in the offer documents?
- What are the different types of mutual fund schemes?
- When will the investor get certificate or statement of account after investing in a mutual fund?