A redemption fee is a fee that is charged by a mutual fund when an investor redeems, or sells, shares of the fund. The fee is charged by the fund in order to discourage investors from frequently buying and selling shares, which can be disruptive to the fund's operations. Redemption fees are typically charged as a percentage of the value of the shares being redeemed, and they are usually paid to the fund's investment adviser. What type of charge is deducted from proceeds when an investor redeems their mutual fund shares? The type of charge that is deducted from proceeds when an investor redeems their mutual fund shares is called a "back-end load." This charge is assessed by the fund company when an investor sells their shares, and is typically a percentage of the total value of the investment. For example, if an investor has a back-end load of 5% and redeems $10,000 worth of shares, they would be charged a $500 fee. What is a redemption penalty? A redemption penalty is a fee that is charged by a mutual fund company when an investor redeems, or sells, shares of a mutual fund before a specified period of time. The fee is typically charged as a percentage of the total value of the shares being redeemed, and is meant to deter investors from frequently buying and selling shares in a mutual fund, which can lead to higher costs for the fund.
What is a short-term redemption fee?
A short-term redemption fee is a fee that is charged by a mutual fund company when an investor sells shares of a mutual fund within a specified time period after purchase. The time period during which the fee is charged varies by fund company, but is typically between 30 and 90 days. The fee is designed to discourage investors from frequently trading in and out of a fund, which can be detrimental to the long-term performance of the fund.
What are the 4 types of mutual funds? 1. Stock mutual funds: A stock mutual fund is a type of mutual fund that invests in stocks, which are securities that represent ownership in a corporation.
2. Bond mutual funds: A bond mutual fund is a type of mutual fund that invests in bonds, which are debt securities that represent a loan made by an investor to a corporation, government, or other entity.
3. Money market mutual funds: A money market mutual fund is a type of mutual fund that invests in money market instruments, which are short-term debt securities with maturities of one year or less.
4. Balanced mutual funds: A balanced mutual fund is a type of mutual fund that invests in both stocks and bonds in an effort to provide a level of stability and growth potential. What is another term for a sales transaction fee on a mutual fund? A sales transaction fee on a mutual fund is also known as a sales load.