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What Is A Mutual Fund's Redemption Fee?





A redemption fee is charged when you withdraw money from a fund. It's different from a back-end load in that a redemption fee goes back into the fund while a back-end load profits the fund company. Some funds will charge you both! A redemption fee is typically charged only if you withdraw your money before a set period. This is done to discourage investors from constantly moving money in and out of funds.

However, some funds waive the redemption fee when you move your money from one fund to another in the same family. Adding to the confusion, some stocks in a family may have a redemption fee while others don't. Finally, some families of funds charge an exchange fee when you shift money from one fund to another. Ask about this before you invest in a fund.



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