In an effort to deter market timers, Fremont Investment Advisors has added a 2% redemption fee to the Fremont International Growth Fund on shares that are held for less than 30 days.
Fremont has been closely monitoring the fund's 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," Fergusson said.
Fergusson figured that because the fund is international, investors can play it against U.S. markets. Fergusson said that the fund is more likely to lure market timers than the firm's 13 other funds. There are no other plans to impose redemption fees on any of Fremont's other funds at this time, although the redemption fee on the international fund is likely to be permanent, Fergusson added.
"As a no-load fund family, we're not big fans of imposing fees," Fergusson said. "But we felt we had no choice in order to protect our long-term shareholders." The proceeds of the fee will be returned to the fund for the benefit of long-term shareholders, according to Fremont.
Despite Fremont's concerns, the International Growth Fund held $37 million in assets at the end of March, down only slightly from $38.3 million the previous month, according to Lipper.