Mutual fundsBack in 2006 when Quantum Mutual Fund launched Quantum Long Term Equity Value Fund, it had chosen to opt out of charging entry loads to investors. However, the exit load was a different story. Quantum MF’s logic behind charging exit load was simple – to encourage long term investment in equities and discourage short term investors from investing in the fund. This has led to Quantum MF investors paying a staggering 4% exit load if they exited within 180 days, while the load was zero if investors redeemed after 730 days of investment. The fund house has now changed its exit load structure for two equity funds including the popular and value-oriented ‘Quantum Long Term Equity Value Fund’.

What was the old exit load structure? If an investor wished to withdraw within 180 days (6 months) in Quantum Long Term Equity Fund, then the exit load applicable was 4%. If you exited after 730 days (2 years), then the exit load was zero in Quantum Long Term Equity Value Fund. Now here is the new exit load structure.

What is the new exit load structure

Quantum Long Term Equity Value Fund

 

·       10% of units if redeemed or switched out on or before 730 days from the allotment: NIL

·       If redeemed or switched out on or before 365 days from the date of allotment: 2% If redeemed or switched out on or after 365 days but before 730 days from the date of allotment: 1%

·       If redeemed or switched out on or after 730 days from the date of allotment: NIL

 

Quantum Equity Fund Of Funds

 

·       10% of units if redeemed or switched out on or before 365 days from the date of allotment: NIL

·      If redeemed or switched out on or before 365 days from the date of allotment: 1%

·      If redeemed or switched out on or after 365 days from the date of allotment: NIL
 

Do note that the old exit load structure made Quantum Long Term Equity Fund one of the most expensive for short-term investors. Equity funds IIFL Focused Equity Fund still charges exit load of 4% if units are redeemed/switched out, on or before three months from the date of allotment. Likewise, UTI Children’s Career Fund – Investment Plan imposes 4% exit load if exited within 364 days.

“Times have changed since 2006, investors have discovered the advantages of investing in equities through mutual funds and also know that if they are invested in equities, then it has to be for the long term. Of course there will be those who wish to speculate but investor who wishes to invest for the long term is realising that equities is the only asset class that can be used to build wealth. For those investors mutual funds today have become the most favoured investment vehicle. With increased investor education and better understanding of their long term investment, investor behaviour has evolved significantly over a period of time,” Quantum MF said.

For example an investor invested in 1,000 units of the Quantum Long Term Equity Value Fund on January 1, 2018 and invested in 500 more units on January 1, 2019. Investor wishes to redeem 200 units due to some urgent requirement on March 5, 2019, in such case on 100 units (10% of 1,000 units purchased on January 1, 2018), no exit load will be charged and 1% exit load will be charged on the other 100 units. As the other 100 units will be redeemed from the first 1,000 units purchased on January 1, 2018, because redemption is processed on FIFO basis.

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on contact@rupeeiq.com