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What are redemptions?

April 26, 2017redemptions

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What are redemptions?

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Redemptions occur when mutual fund investors sell back their shares to their fund. Redeeming mutual fund shares is a normal activity for shareholders and is one of the benefits of investing in mutual funds, as the funds provide liquidity to shareholders. By law, mutual funds must stand ready to buy back their shares daily. In 2002, stock fund investors redeemed $880 billion in shares, or about 29 percent of average total net assets.