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An exit load is the fee AMCs (Asset management companies) charge the investor at the time of exiting or retrieving the units of the fund. The primary reason for levying exit load is to discourage investors from backing out and pulling out their investments before the lock-in period is over.
Exit load in mutual funds is generally a percentage of the Net Asset Value (NAV) of an investor's mutual fund. The Net Asset value is the net value of an entity and is calculated as the entity’s assets minus the value of its liabilities.
Usually, the AMCs deduct the exit load from the total NAV, and the remaining amount gets credited to the investor’s account.
Usually, there is no exit load on liquid funds, debt funds may or may not have any exit load, and it is usually 1% for equity funds. Though, it varies from AMC to AMC.
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