Question

What is the impact of 'exit load' and 'capital gains tax' on actual investor returns?

Accepted Answer

Exit load reduces the effective redemption price and tax on gains further reduces net returns — post-tax, post-load returns are always lower than NAV-based returns — Actual investor returns are lower than simple NAV-based returns due to: (1) Exit load — deducted from redemption proceeds before crediting to investor; (2) Capital gains tax — STCG or LTCG payable on gains reduces net return. Investors should always evaluate post-tax, post-load returns when comparing investment options.