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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

Under SEBI rules, how is the repurchase price of units of an open-ended scheme with an exit load related to the NAV?

The repurchase price is the NAV minus the exit load. When an investor redeems units from an open-ended scheme, the fund deducts the exit load percentage from the applicable NAV, so the payout per unit is lower than NAV whenever a load applies.

  1. ARepurchase price equals NAV plus the exit load
  2. BRepurchase price is NAV minus the exit loadCorrect
  3. CRepurchase price is always the face value of the unit
  4. DRepurchase price is the average of NAV and sale price

Explanation

For an open-ended scheme the repurchase (redemption) price is the NAV less the exit load. Adding the load would raise the price paid, which is wrong. The price is NAV-linked, not tied to face value.

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