Redemption Fee

An amount charged when money is withdrawn from a mutual fund. Unlike a back-end load, which profits the fund company, redemption fees go back into the fund itself and thus do not represent a net cost to shareholders. Redemption fees typically are charged only on withdrawals made before some relatively brief period, commonly 30, 180 or 365 days. These fees are typically imposed to discourage market timers, whose quick movements into and out of funds can be costly and disruptive.

 

 

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