Mutual fund On investing in, your money is managed by Asset Management Companies (AMC). These companies appoint fund managers for each scheme or fund, which are assisting a team of market experts and financial analysts. Managing the expenses of these professionals and dealing with market risks can be a complex task. For this reason, AMC charges some fees (fees) from investors. It will be beneficial for you to understand these charges before investing.
The following are the major charges in mutual funds:
Entry Load
This is the fee that takes a fund house investor when he buys a unit of mutual funds. However, SEBI (SEBI) stopped laying entry on equity mutual funds in 2009.
Exit Load (Exit Load)
This fee is incurred when the investor redeems or sells mutual fund units. Exit load is not fixed and this scheme may vary. According to Bankbazaar, the exit load varies from 0.25% to 4%, which depends on what type of scheme you have invested in. Fund houses determine this fee so that investors remain invested in the scheme for a certain period of time.
Management fee
This fee is charged from investors so that the services offered to the fund managers for the management of the scheme can be paid. It is also often known as Expense Ratio.
Account Fees
Sometimes AMC charges account fees from investors who fail to meet the need for minimum balance amount. This fee is directly reduced from the portfolio of the investor.
Service and Distribution Charges
These fees are charged by AMC to meet expenses like printing, mailing and marketing.
Switch fees
Many mutual fund schemes allow investors to switch their investment from one plan to another. The fee charged for this service is called switch fee.
It is important to understand these charges when investing in mutual funds, as they can affect your total returns.
(Disclaimer: This article is written only for the purpose of information. Please consult your financial advisor before any type of investment or before taking financial risks. India TV will not be responsible for any kind of risk.)
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