Redemption fee
Redemption fee
Redemption Fee
Redemption fee.
Some open-end mutual funds impose a redemption fee when you sell shares in the fund, often during a specific, and sometimes brief, period of time after you purchase those shares.
The fee is usually a percentage of the value of the shares you sell, but it may also be a flat fee, or fixed amount.
The purpose of the fee is to prevent large-scale withdrawals from the fund in response to changes in the financial markets, which might require the fund manager to sell holdings at a loss in order to meet the fund's obligation to buy back your shares.