Things to be known Before Exiting Mutual Funds

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Mutual funds are better place to invest than investing into capital markets directly, Mutual funds are low investment plans, they have less brokerage, acquisition and charges, as there are less charges the  investors expenses also declines, but once investing in mutual fund and exiting in the middle of the maturity period is not a appreciable way, we will learn about a few things on Mutual funds and the points that should be remembered by the investors while exiting from the mutual funds.

High Exit Charges

The asset management companies are giving an option of buying of shares from investors as they wanted to exit from the mutual funds, but they will be charged with exit charges which may vary from 4% to 5% sometimes, if a investor is exiting from mutual funds before the maturity period then the extra charges applied on investor are exit charges.

Track Record Shortage

Close ended schemes are available at new fund offers time only, so the past performance and the history can’t be verified in the ean time, the scheme type to choose will depend on investors choice of need and thinking, if investor want to invest large amount and want to wait for maturity time then closed ended schemes are better to choose, if he wants to invest small amounts for small needs and short span and wants to change investments then open ended schemes are good.

Charges on Mutual Funds

Once investor going to invest in Mutual funds they only try to learn about loses, profits but they also need to know about how much they are needed to invest to get returns, there will be some charges and to buy the mutual funds we need buy units which in economics called as Unit Charge or Comission Load.

Entry Load

From August 2009 all the entry loads are not inn use, the amount needed to or the charges to be paid at the time of investing is entry load.

Exit Load

If you are coming out of schemes before maturity time then the fund agencies will make exit charges, many schemes does not make exit charges because their main aim is to give return to investors, in remaining schemes exit charges will be 1% to 3% and this will depend on the time taken to exit, according to SEBI the fund decreased by exiting should be filled by the fund agencies, so to make this loss zero the agency will charge exit loads (20 basis points).

Transaction Charges

Transaction charge will be of Rs.100, for less than Rs.10,000 investments there will be no transaction charge, for more than Rs.10,000 asset management companies charge Rs.150, if it is in SIP way then and exceeds Rs.10,000 then they charge Rs.100 in 4 times.

Other Charges

The investors also need to bear other charges for the time of being investing, Fund agencies will pay Security Transaction Tax (STT), these taxes will be on investors indirectly.

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