Still learning the ropes. Today I sold off a small slice of CVSIX. Hadn’t touched that one since buying it in late November. Sold only about 3% of holding. Quite obviously there won’t be any frequent trading fee assessed by Fidelity, as I’ve held it at least 90 days (60 days being the minimum holding time as I understand it.)
Now the question: How early will I be able to purchase more shares of CVSIX - should my rebalancing discipline so require - without incurring any Fidelity-assessed penalties? I understand that I need to adhere to whatever frequent trading regulations Calamos may have in place. But that’s not what I’m concerned about here. Just wondering if there’s anything at Fidelity I need to be concerned about when buying back into a load-waived / NTF fund after selling some of it.
Thank you for your thoughts.
Comments
Long answer - there are three different types of trading fees:
1) Fidelity excessive trading fees - applies only to Fidelity funds; kicks in when you make two round trips in the same fund in the same account within 90 days. A round trip is defined as a sell followed by a buy within 30 days. Obviously doesn't apply since CVSIX isn't a Fidelity fund.
http://personal.fidelity.com/products/trading/Trading_Platforms_Tools/excessive_trading_policies.shtml
2. Short term trading fee imposed by the mutual fund. Again obviously doesn't apply to your question, since that's about fees that Fidelity imposes (as opposed to passes through).
3. Short term trading of NTF funds. "Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days."
https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/Brokerage_Commissions_Fee_Schedule.pdf
Since you asked about a fee on repurchasing shares, not on selling them, again this doesn't apply to your question. More generally, it doesn't apply because you've held your shares for over 60 days. Finally, note that for the purpose of this NTF fee, FIFO applies - so Fidelity will consider your oldest shares first (regardless of what you declare for tax purposes). This is to your advantage.
http://personal.fidelity.com/products/trading/Trading_Platforms_Tools/excessive_trading_policies.shtml
Yep - #3 is closest to what I wondered about. Fido has some great funds of their own, but I haven’t used any of them. No plans to. As you note (under #1) they have some stringent trading rules re their own funds.
Re #2 - There wouldn’t be a need to buy back in for the next 30 days. And from experience, that seems to be about where most fund houses have objections. But, to be safe, I’ll re-read the fund’s prospectus before buying back in.
If folks wonder, CVSIX has done better than a lot of my other holdings the past few months. Today I was simply freeing up a bit of cash after having added to something that has fallen recently. (How I invest.)