Launching what it is calling a pre-emptive strike against arbitrage traders, Vanguard of Valley Forge, Pa., announced plans to charge these opportunists a 2% redemption fee on the sale of shares held less than two months on nine of its international equity funds.

The new fees are aimed at discouraging investors from using these funds to take advantage of pricing differences between U.S. and international markets, Vanguard said. Some investors engage in short-term trading of these international fund shares, attempting to profit from pricing differences arising from the varying closing times of exchanges in the U.S., Europe and Asia.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.