As an investor, you should know how much are you paying to the mutual fund house through these charges.  These will have a direct impact on your returns from mutual funds

Why is important to know expense ratio and exit loads in mutual funds

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Expense ratio is the fee charged by the mutual fund house to manage the funds of investors.

What is expense ratio

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Expense ratio is the fee charged by the mutual fund house to manage the funds of investors.  generally, expense ratio more than 1% is deemed to be on higher side and such funds are better avoided.

how expense ratio  is calculated

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It is charged every day on prorata basis till you stay invested in the fund.  This is done to ensure that you pay the fee only until the time you stay invested in the fund

how expense ratio  is chrged from you

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Exit loads are like some minor penalties imposed by the mutual fund house to discourage premature redemption of mutual funds by the investors.

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what is exit load

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if NAV is Rs 100, you want to redeem 1000 units and the exit load declared by the mutual fund house is 1%.  So, the exit load will be = 1% X 1000 (number of units) X 100 (NAV) = Rs. 1000.  This amount will be deducted from the amounts receivable to you from the redemption of the units.

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how the exit load is calculated

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This amount will be deducted from the amounts receivable to you from the redemption of the units. As per sebi, a maximunm of 7% exit load can be charged by the mutual fund houses. but, generally the exit loads are maintained at about 1%

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how the exit load is charged