Fidelity, Putnam Add More Fees to Fight Market Timing

December 1, 2003 ( - Two prominent mutual fund companies, including one at the center of the fund trading scandal, have slapped new short-term redemption fees on additional funds in their lineups as a way to combat market timers.

At Fidelity, 10 international funds in its Advisor series will start carrying redemption fees for shares purchased after March 31 2004, Anne Crowley, a spokeswoman for the Boston company, told Dow Jones.

Five of those funds – Fidelity Advisor Diversified International, Europe Capital Appreciation, Global Equity, International Capital Appreciation and Overseas – will have 1% fees imposed on shares sold or exchanged within 30 days of purchase, while Fidelity Advisor Emerging Markets Income will have a 1% fee on shares sold within 90 days.

Additionally, shares sold within 90 days in Fidelity Advisor Emerging Asia, Japan, Korea and Latin America funds will have a 2% fee imposed.  Redemption fees are designed to discourage in-and-out market-timing trades while covering the costs incurred to the funds by such trades. Redemption fees are paid back to the funds, not to the fund-management companies.Fidelity already has redemption fees on over 100 funds in its lineup of 342 offerings, according to the report.

Meanwhile, Boston-based Putnam is implementing a 1% redemption fee on two funds investing in high-yield bonds, Putnam High Yield Trust and Putnam High Yield Advantage Fund, both effective December 1, applied to shares sold or exchanged within 90 days of purchase, according to the company’s Web site.