Two fund houses - Motilal Oswal MF and Franklin Templeton have recently done away with exit loads for investors who wish to switch from regular plan to direct plan.
DSP Mutual Fund was the first AMC to remove exit load for such switches.
While Motilal Oswal MF has done away with exit load for investors who want to migrate from regular to direct plan within the same scheme from June 10, Franklin Templeton MF has imposed no load structure from May 9, 2019 on its schemes.
Industry experts feel that the relaxation in exit loads may not encourage investors to switch to direct plans. While no load structure may look attractive to investors, there is little to cheer if they factor in taxation, they said.
Bangalore RIA Lovaii Navlakhi, CEO, International Money Matters said that most schemes do not charge exit loads after a year. Hence, the recent revision in exit load structure of these fund houses applies to investors who wish to switch to direct plan within a year. Since STCG in equity funds is 15% and marginal rate of taxation in debt funds, such switching does not make sense.
He further said that such migrations make more sense after LTCG comes into picture due to lower taxation.
Suresh Sadagopan, Founder, Ladder7 Financial Advisories said that following the tax implications, he does not see many investors switching from regular to direct plan within a year of their investment.
