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    Question ID:   19483         Current Version: 1
Question: What is a fund redemption fee?
Category: Business & Finance > Investing
Keywords: mutual fund, redemption fee
Type: what
Rating:(0 ratings)    Views: 98    Discussions: 0   In Watch Lists: 1  

 
    Answer:

A redemption fee is another type of fee that some funds charge their shareholders when the shareholders redeem their shares. Although a redemption fee is deducted from redemption proceeds just like a deferred sales load, it is not considered to be a sales load. Unlike a sales load, which is used to pay brokers, a redemption fee is typically used to defray fund costs associated with a shareholder's redemption and is paid directly to the fund, not to a broker. The SEC limits redemption fees to 2%. The SEC has adopted a rule addressing the imposition of redemption fees by mutual funds in Rule 22c-2 of the Investment Company Act of 1940.

Source: SEC

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