Redemption fee
(redirected from Redemption Fees)Redemption fee
A fee some mutual funds charge when an investor sells shares within a specified short period of time.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Redemption Fee
A fee that some mutual funds assess when a shareholder redeems shares from the fund during a certain, usually brief period of time after purchase. It may be a flat fee or a percentage of the value of the shares redeemed. Mutual funds charge redemption fees to discourage new investors from withdrawing from the mutual fund if the fund's net asset value drops unexpectedly.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Redemption fee.
Some open-end mutual funds impose a redemption fee when you sell shares in the fund, often during a specific, and sometimes brief, period of time after you purchase those shares.
The fee is usually a percentage of the value of the shares you sell, but it may also be a flat fee, or fixed amount.
The purpose of the fee is to prevent large-scale withdrawals from the fund in response to changes in the financial markets, which might require the fund manager to sell holdings at a loss in order to meet the fund's obligation to buy back your shares.
Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.