Redemption Fee

Redemption Fee: A redemption fee is a charge that investors may incur when they sell or redeem Shares in a mutual fund or other investment product before a specified period. This fee is intended to discourage short-term trading and is usually a percentage of the amount redeemed.

Examples:

• If an investor redeems $10,000 worth of Shares in a mutual fund that has a 2% redemption fee, they would pay a $200 fee.
• A mutual fund may impose a redemption fee if Shares are sold within 90 days of purchase to discourage quick trades.

Cases:

• A hedge fund may charge a 1% redemption fee for any withdrawals made within the first year of investment.
• If a fund’s Prospectus states a redemption fee of 3% for Shares sold within six months, an investor redeeming $5,000 would incur a $150 fee.