In an effort to deter market timers, Fremont Investment Advisors has a added a 2% redemption fee to its International Growth Fund on shares that are held for less than 30 days, the firm announced today.
Fremont has been closely monitoring the funds activity because the firm has noticed small bursts of active trading activity in the past, said Bill Fergusson, VP of marketing for Fremont.
"We noticed, in the past month, a significant uptick in active trading in the fund," said Fergusson. "And frankly, we have no idea why." However, Fergusson said that because the fund is international, investors can play it against U.S. markets. Fergusson figured that the fund is more likely to lure market timers than the firms 13 other funds and that the fee is probably going to be permanent. There are no other plans to impose redemption fees on Fremont funds at this time, Fergusson added.
Regardless, Fremont has imposed the 2% fee to discourage those recent market timers and any others from moving in and out of the fund. The proceeds of the fee will be returned to the fund for the benefit of long-term shareholders, according to Fremont.
"As a no-load fund family, were not big fans of imposing fees," Fergusson said. "But we felt we had no choice in order to protect our long-term shareholders," Fergusson said.
In spite of Fremonts concerns, the International Growth Fund held assets of $37 million at the end of March, down only slightly from $38.3 million the previous month, according to Lipper.