Mutual Funds With No Exit Load

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 25th June 2024 - 02:48 pm

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Are you looking for a flexible, cost-effective way to invest in mutual funds? Look no further than mutual funds with no exit load! These funds allow you to invest your money without worrying about hefty redemption fees, allowing you to manage your investments on your terms.

What Is An Exit Load In Mutual Funds?

Before we dive into the specifics of mutual funds with no exit load, let's first understand what an exit load is. An exit load is a fee that mutual fund companies charge when you redeem or sell your units within a specified period after investing. This fee is typically a percentage of the redemption amount. It is designed to discourage short-term trading and ensure fund stability. Exit loads can vary from fund to fund and may range from 0.25% to 2% or more, depending on the holding period.

Top Funds With No Exit Load

Here's a table showcasing some of the top mutual funds with no exit load:

Note: Data and NAV as of June 17, 2024

Fund Name (Direct Plan) AUM (₹) NAV (₹) 1 year Returns (%)
Aditya Birla Sun Life Liquid Fund 44,331 Cr 395.8326 7.4
Axis Liquid Fund 36,518 Cr 2,725.63 7.38
Baroda BNP Paribas Liquid Fund 8,973 Cr 2,828.04 7.36
Edelweiss Liquid Fund 5,096 Cr 3,167.99 7.44
ICICI Prudential Liquid Fund 46,423 Cr 363.03 7.36

Overview: List of Liquid Funds with No Exit Load

Here is a list of liquid funds with no exit load, allowing investors to withdraw their investments without additional fees. These funds provide high liquidity and safety with reasonable returns, making them an attractive option for short-term investments and parking surplus money:

Aditya Birla Sun Life Liquid Fund

● Launched in January 2013
● Benchmark: Crisil Liquid Fund Index
● Investment Strategy: Provide high liquidity and safety with reasonable returns through investments in debt and money market instruments
● Exit Load:

○    0.0070% if redeemed within 1 day
○    0.0065% if redeemed within 2 days
○    0.0060% if redeemed within 3 days
○    0.0055% if redeemed within 4 days
○    0.0050% if redeemed within 5 days
○    0.0045% if redeemed within 6 days
○    Nil after 6 days

Axis Liquid Fund

● Launched in October 2009
● Benchmark: Nifty Liquid Index
● Investment Strategy: Generate reasonable return commensurate with low risk and a high degree of liquidity from a portfolio of money market and high-quality debt securities
● Exit Load:

○    0.0070% if redeemed within 1 day
○    0.0065% if redeemed within 2 days
○    0.0060% if redeemed within 3 days
○    0.0055% if redeemed within 4 days
○    0.0050% if redeemed within 5 days
○    0.0045% if redeemed within 6 days
○    Nil after 6 days

Baroda BNP Paribas Liquid Fund

● Launched in February 2009
● Investment Strategy: Generate income with high liquidity by investing in a portfolio of money market and debt instruments
● Exit Load:

○    0.0070% if redeemed within 1 day
○    0.0065% if redeemed within 2 days
○    0.0060% if redeemed within 3 days
○    0.0055% if redeemed within 4 days
○    0.0050% if redeemed within 5 days
○    0.0045% if redeemed within 6 days
○    Nil after 6 days

Edelweiss Liquid Fund
● Investment Strategy: Provide reasonable returns commensurate with low risk while providing a high level of liquidity through a portfolio of money market and debt securities
● Invests in very short maturity (1-3 months) debt instruments providing returns, safety, and liquidity
● Exit Load:

○    0.0070% if redeemed within 1 day
○    0.0065% if redeemed within 2 days
○    0.0060% if redeemed within 3 days
○    0.0055% if redeemed within 4 days
○    0.0050% if redeemed within 5 days
○    0.0045% if redeemed within 6 days
○    Nil after 6 days

ICICI Prudential Liquid Fund

● Launched in November 2005
● Investment Strategy: Seeks reasonable returns commensurate with low-risk levels while providing a high level of liquidity. Approximately 80% of the corpus was invested in money market securities and the balance in high-quality debt instruments.
● Exit Load:

○    0.0070% if redeemed within 1 day
○    0.0065% if redeemed within 2 days
○    0.0060% if redeemed within 3 days
○    0.0055% if redeemed within 4 days
○    0.0050% if redeemed within 5 days
○    0.0045% if redeemed within 6 days
○    Nil after 6 days

Liquid funds invest in bonds with maturities of up to three months. They are suitable for parking the amount set aside to meet emergency needs or surplus money that is not needed for a few weeks up to a year. While they offer better returns than bank accounts, the risk of a loss is negligible but not guaranteed. These funds are geared to deliver only marginally higher returns than bank accounts, providing steady but low returns, and are not suitable for long-term wealth creation.

Benefits Of Investing In Mutual Funds With No Exit Load

● Flexibility: No exit load mutual funds allow you to redeem your units whenever necessary without incurring additional charges. This flexibility is particularly useful if you have short-term financial goals or need to rebalance your portfolio.

● Cost-Effective: By investing in funds with no exit load, you can save significant money on redemption fees. This means more of your money stays invested, potentially leading to higher returns over the long run.

● Encourages Long-Term Investing: While no exit load funds offer flexibility, they also encourage investors to stay invested for the long haul. By not charging redemption fees, these funds remove the temptation to make frequent, short-term trades based on market fluctuations.

● Ideal for SIPs: Systematic Investment Plans (SIPs) are a popular way to invest in mutual funds. By choosing a no-exit load fund for your SIP, you can ensure that you don't incur additional charges if you need to stop or redeem your investments.

● Easier to Switch: If unsatisfied with a particular fund's performance, no-exit-load funds make it easier to switch to another fund without worrying about redemption fees. This allows you to make informed investment decisions and adapt to changing market conditions.

How To Choose The Right No Exit Load Mutual Fund?

● Assess Your Financial Goals: Before investing in any mutual fund, it is crucial to define your financial goals. Are you saving for retirement, a child's education, or a short-term objective? Understanding your goals will help you select a fund that aligns with your investment horizon and risk tolerance.

● Consider the Fund's Performance: While past performance doesn't guarantee future results, evaluating a fund's track record is essential. Look for consistency in returns over different market cycles and compare the fund's performance to its benchmark index and peer funds.

● Evaluate the Fund Manager: The fund manager's expertise and experience are vital to the fund's success. Research the fund manager's background, investment philosophy, and past performance to ensure a proven track record of generating returns.

● Understand the Fund's Investment Strategy: Each mutual fund has a specific investment strategy. Some focus on large-cap stocks, while others invest across market capitalisations. Some may have a value-oriented approach, while others prioritise growth. Ensure the fund's investment strategy aligns with your goals and risk appetite.

● Check the Expense Ratio: While no exit load funds don't charge redemption fees, they still have an expense ratio, which is the annual fee charged by the fund house for managing the fund. A lower expense ratio means more money is invested, potentially leading to higher returns. Compare the expense ratios of different no-exit load funds to find the most cost-effective option.

Risks Associated With Investing In Mutual Funds With No Exit Load

● Market Risk: Like any mutual fund investment, no exit load funds are subject to market risk. The value of your investments may fluctuate based on market conditions, and there's no guarantee of returns.

● Lack of Discipline: While the absence of exit loads offers flexibility, it may tempt some investors to make impulsive redemptions based on short-term market movements. This lack of discipline can lead to suboptimal investment decisions and lower returns.

● Opportunity Cost: If you need to redeem your units during a market downturn, you may sell at a loss. This opportunity cost can be significant, especially if the market rebounds shortly after you exit the fund.

● Fund Performance: No exit load funds are not immune to underperformance. If a fund consistently underperforms its benchmark or peer funds, the absence of exit loads may not compensate for the lost returns.

● Concentration Risk: Some no-exit load funds may have a concentrated portfolio, investing heavily in a few sectors or stocks. This concentration risk can amplify losses if the chosen sectors or stocks underperform.

Conclusion

Mutual funds with no exit load offer investors a flexible and cost-effective way to invest in the market. By eliminating redemption fees, these funds provide the freedom to enter and exit at your convenience, making them ideal for short-term goals and SIPs. However, choosing the right no-exit load fund is crucial based on your financial goals, risk tolerance, and investment horizon. You can make an informed decision and potentially maximise your returns by carefully evaluating factors such as fund performance, manager expertise, investment strategy, and expense ratio. Remember, while no exit load funds offer advantages, they are not entirely risk-free. Maintaining investment discipline and a long-term perspective is essential.
 

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Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

Frequently Asked Questions

Are There Any Tax Implications For Investing In Mutual Funds With No Exit Load?  

What Are Some Examples Of Mutual Funds That Currently Offer No Exit Load Options? 

Are There Any Hidden Fees Or Charges Associated With Mutual Funds That Claim To Have No Exit Load?  

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