Short Term Trading Of Mutual Funds

The proceeds of this fee go directly to the fund benefiting remaining unitholders and are designed to deter excessive trading and offset the associated costs.

Short term trading of mutual funds. Constant trading of mutual fund shares would have serious implications for the fund s. While these policies are designed to discourage excessive or short term trading there is no assurance that these policies will be effective or will successfully detect or deter market timing. This is a summary of only fidelity s fund policies. Mutual funds inside your 401 k account may be subject to short term trading fees.

Short term trading fees are imposed when you purchase shares and then sell them again within 30 90 days. Short term trading fees mutual funds that are intended for long term investing typically charge fees if units are redeemed within a short time period i e. In the following sections we will discuss four leading short term mutual fund investments suitable for investors of various categories. Please read the fund facts or prospectus before investing.

A legal but frowned upon practice whereby traders attempt to gain short term profits from buying and selling mutual funds to benefit from the differences between the daily. Bmo mutual funds are offered by bmo investments inc a financial services firm and a separate legal entity from bank of montreal. Commissions trailing commissions management fees and expenses all may be associated with mutual fund investments. When you read or hear about short term investing the terminology is generally referring to investing for periods of less than three years it is important to keep in mind that many investment securities including stocks mutual funds and some bonds and bond mutual funds don t really make sense for investment periods of less than 3 years.

What exactly is short term investing. Short duration fund. A 3 5 year investment period qualifies as medium term and more than 5 years qualifies as long term. Sales charges and short term trading fee mutual fund sales charges or commissions are called loads.

Each fund company has their own excessive trading policy stated in their prospectuses. These may be paid to the advisor dealer or mutual fund company depending on the type of load see below. A period of less than 3 years is considered as a short term time horizon for mutual fund investors. In this scenario the mutual fund may charge you a fee of 1 to 3 upon the sale of the recently purchased shares.