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AMCs increase exit loads on equity MF schemes

To encourage investors to invest funds for long term, many AMCs have started revising their exit loads. Other AMCs are also likely to increase their exit load

October 16, 2012 3:26 IST | India Infoline News Service
To attract investments in equity mutual fund schemes for long term, asset management companies (AMCs) have started revising upwards their exit loads.

The move follows a strong rally in the stock markets, which has led to many retail investors redeeming their equity MF schemes. The net outflow in September rose to a two-year high of Rs. 35.59 billion from these funds, according to media reports.

Therefore, to encourage investors to invest funds for long term, many AMCs—including ICICI Pru MF, JP Morgan MF and Axis MF—have started revising their exit loads. Other AMCs are also likely to increase their exit load.

JPMorgan MF has modified exit load for at least five schemes from 12 October 2012. These schemes include JPMorgan India Equity Fund, JPMorgan India Smaller Companies Fund, JPMorgan JF Greater China Equity Off-shore Fund, JPMorgan JF ASEAN Equity Off-shore Fund and JPMorgan Emerging Europe, Middle East and Africa Equity Off-shore Fund.

Under the new structure, an exit load of 3% will be charged if units are redeemed or switched out in six months from the date of allotment, 2% if units are redeemed or switched out up to 12 months and 1% if units are redeemed or switched out up to 18 months.

ICICI Pru MF has also revised the exit load for its schemes—including ICICI Prudential Equity and ICICI Prudential Discovery Fund. It would charge an exit load of 3% if units are redeemed or switched out on or before six months from the date of allotment, 2% if units are redeemed or switched out on from 6-18 months.  No exit load will be levied if units are redeemed or switched out on or after 18 months.

Axis Mutual Fund has also revised the exit load on its schemes. The AMC now charges 3% for redemptions within before six months in certain schemes. Earlier, the fund house charged 1% exit load for redemptions in one year. The exit load will be 2% if redeemed after 6-12 months and 1% if redeemed after 12-24 months.

The load structure will be equally applicable to all special products offered under these schemes. But, no load is charged on switches between plans and options of the scheme. Also, units allotted on reinvestment of dividends are not subject to load, Axis MF said in a notification.

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