The fee will apply to shares held less than 90 days or one year, depending on the fund. Five of T. Rowes 19 international funds already have redemption fees. The firm also upped the redemption fee on its International Equity Index Fund to 2% from 1% so that it is consistent with the new initiative.
In addition, the firm also dropped the redemption fee holding period for shares of its index funds, cutting the time in half to 90 days from 180 days.
The Baltimore based firm also added a 1% fee for adviser class shares of the T. Rowe Price Small-Cap Value Fund redeemed by those holding it for less than a year. The retail class of this fund already employs the policy.
All changes will be implemented as of June 1, and all redemption fees collected will be paid to the funds and reduce the profits of those exchanging too quickly.
In addition to implementing the fee, T. Rowe said it has also monitored daily trade activity, suspended purchasing privileges and used fair-value pricing. The firm said that intermediaries that cannot implement the fees due to system limitations, may be given an extension. However, all intermediaries will be required to come in line by the end of the year.
