What are redemption fees? Are they unique to load or no-load funds?
Redemption fees are sometimes charged by both load and no-load mutual funds to discourage frequent trading in and out of a mutual fund. This fee may be assessed as 1% of the value of the shares sold, but usually disappears after the investment is held for a designated time, typically 6 months to 1 year. This fee is very different from a contingent deferred sales charge and should not dissuade a long-term investor from seriously considering a fund with a redemption fee. 15. Define expense ratio. What guidelines can you use to assess expense ratios? The expense ratio reflects the percentage of fund assets paid for operating expenses and management fees, including, if applicable, 12b-1 fees for marketing, distribution, and compensation to the financial professional. Expense ratios are reported for both no-load and load funds, but are typically higher for the latter. Expense ratios may range from less than 0.5% to more than 2% of fund assets. Recall that expense ratios for index funds are
