1 week ago
Exit Load Capped at 3%, But Early Losses Persist
SEBI has lowered the maximum fee that mutual funds can charge when investors leave early.
The new maximum exit load is 3%, but individual schemes may charge less.
This fee is only one possible cost.
The value of the fund itself can also fall when markets are weak.
In 2025-26, 731 schemes had negative annual returns.
This means an investor could lose more than 3% if the investment has fallen in value.
Some mid-cap and small-cap funds may also take longer to sell investments during extreme market stress.
Investors should check the scheme rules and the current value of their investment before redeeming.
SEBI has reduced the maximum permissible mutual fund exit load from 5% to 3%.
The actual exit load depends on the individual scheme and is not automatically 3%.
Schemes reporting negative annual returns rose from 243 in 2024-25 to 731 in 2025-26.
An investor can lose money through both the exit load and a decline in the investment’s market value.
SEBI stress tests found that large small-cap and mid-cap funds could face liquidity pressure during extreme redemption scenarios.
- Who
- The Securities and Exchange Board of India (SEBI), mutual fund schemes, and investors.
- What
- SEBI capped the maximum permissible mutual fund exit load at 3%, while its data highlighted investment losses and liquidity risks that can affect early exits.
- Where
- India’s mutual fund market.
- When
- The change and reported figures relate to 2025-26, with stress-test data reported for March 2026.
- Why
- To reduce one cost of early redemption and protect remaining unitholders, while the report also shows why market losses and portfolio liquidity remain important risks.
Key facts
- Maximum exit load
- 3%, reduced from the earlier ceiling of 5%
- Negative-return schemes
- 731 schemes in 2025-26, compared with 243 in 2024-25
- Schemes returning 10% or more
- 198 in 2025-26, down from 304 a year earlier
- Mutual fund AUM
- ₹73.7 lakh crore at the end of March 2026, up from ₹65.7 lakh crore
- Unique investors
- 6.1 crore in 2025-26, up 13.2% during the year
- Mid-cap stress test
- Top 10 mid-cap schemes required an average of 17 days to liquidate 50% of portfolios in the March 2026 scenario
- Small-cap stress test
- Top 10 small-cap funds required an average of 38 days to liquidate 50% of portfolios in the March 2026 scenario
Sources
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