| When investors want to sell off their shares, they | | | | have less than a given dollar amount in them. |
| are obliged to pay some fees to the issuing | | | | Purchase fee is typically the opposite of a mutual |
| company. This is known as the redemption fee. | | | | fund redemption fee because, unlike the latter, it |
| The fee covers for the costs involved in | | | | is charged when the investor is buying new stock |
| managing the investment, which in this case is the | | | | within the fund. Other expenses that differ from |
| cost incurred in the transaction, purchases, | | | | this fee are the management fees which are |
| exchanges and redemption as well. When an | | | | basically payable to the fund manager. The fee is |
| investor redeems his shares, it means that there | | | | imposed upon investors to basically discourage |
| will be an interruption in the way the investment | | | | them from making short-term investments. |
| will perform in the stock market. | | | | Probably many people are wondering when the |
| The redemption fees sometimes are catered for | | | | fee is imposed on the investor. |
| in the mutual fund operations. This is to say that, | | | | If an investor makes a purchase and decides to |
| they are imposed directly on the investor during | | | | sell of the shares with a 30 day period, the issuing |
| the time of transaction. A redemption fee should | | | | company may choose to impose a 2% fee on |
| be differentiated from other fees like exchange | | | | the sale. If one has invested $2000 and decides |
| fee, which is the fee charged for exchange of | | | | to sell off, he will have to do away with $40 as |
| securities for others within the same fund. An | | | | the fine for 'withdrawing way too soon.' Mutual |
| account fee is also different in that it is charged in | | | | fund companies impose this fee, as earlier |
| connection to maintenance of the investors | | | | mentioned, to discourage short-term investments |
| account. This is mainly charged on accounts that | | | | because they translate to higher operating fees. |