The competitive intensity in the mutual fund (MF) industry is moving beyond scheme performance, cost structures, and distribution.
In recent months, several fund houses have rationalised exit loads applicable on redemptions.
In August, Tata MF introduced a uniform exit load of 0.5 per cent across its equity and hybrid schemes, applicable on redemptions within 30 days of investment.
This marked a sharp reduction from the earlier structure, where most active schemes imposed a 1 per cent exit load on redemptions within one year.
SBI MF followed with similar cuts in exit loads in September.
The exit loads, which previously stood at 1 per cent on redemptions within a year for most of its equity schemes, are now down to 0.25 per cent for exits within 30 days and just 0.1 per cent for redemptions within 90 days.
There is no exit load on redemptions after 90 days.
According to D P Singh, deputy managing director (MD) and joint chief executive officer (CEO) at SBI MF, the change was implemented with investor interest and competition in mind.
“It is due to competition to an extent.
"If our schemes have higher exit loads than competitors, then naturally we will be at a disadvantage.
"Moreover, lower exit loads also make it easier for fund of funds to tweak their allocations,” he said.
Exit loads are charges paid by investors for exiting or partially withdrawing from an MF scheme before a set period.
They are applicable on the entire redemption amount and are one of the factors investors consider during scheme selection, especially for those looking to take a short-term bet or planning a systematic transfer plan.
Exit load is not the primary factor for equity schemes, as they are typically medium-term investments where the exit load period lapses well before investors plan to redeem.
Exit loads do, however, become more relevant for short-term investments, particularly in the three- to 12-month window, as most fund houses charge between 0.25 per cent and 1 per cent if you redeem within the first year.
“For an investor with a short horizon, this charge can eat into returns and should be considered," said Feroze Azeez, joint CEO, Anand Rathi Wealth.
Apart from Tata MF and SBI MF, several other fund houses have also lowered or eliminated exit loads.
Jio BlackRock MF, among the latest entrants in the industry, charges no exit load across all its schemes so far.
“Our vision is to make investing easier and more accessible. Hence, we are trying to reduce as many frictions as possible.
"However, this may not always be the case. It will depend on the exposure that the fund has and the strategy it adopts,” said Sid Swaminathan, MD and CEO, Jio BlackRock Asset Management Company.
According to Azeez, the declining trend in exit loads can make MF entry easier for more investors.
“More than just a competitive strategy, this approach reflects a broader push towards financial inclusion.
"By removing redemption hurdles, Jio makes MFs feel as flexible as other digital financial products, encouraging participation from individuals who may otherwise have stayed away,” he said.
Other fund houses that have announced exit load changes include Kotak MF and UTI MF, which have reduced the exit load period from one year to 180 days and 90 days, respectively, for their balanced advantage funds.
DSP MF, Nippon India MF, and Samco MF have also eased exit loads for select schemes in recent months.
© 2025