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Scottrade's new 90 day fund fees.

Until today, it you sold a non transaction fund (NTF) within 90 days of purchase they hit you with a $17 short term trading fee. As of today, that fee is now $49! I didn't ask what it was for a transaction fee fund. It use to be $34 but obviously that will be higher now too.

Comments

  • Scottrade has "always" had a $17 redemption fee for TF NL funds. So if they were charging you $34, that should have been $17 (redemption) + $17 (short term). That is, they had been charging the same $17 short term redemption fee for all NL funds, NTF or TF.

    I've read different statements on what the short term redemption fee used to be on TF funds, so I can't say if you were getting overcharged. Scottrade's short term redemption fee page has not yet been updated. It reads:
    Redemption of no-load fund shares purchased through the NTF program, which are held 90 days or less, will be charged a short-term redemption fee (detailed information on our fees can be found in the Explanation of Fees (PDF)) with the exception of Rydex, Guggenheim, ProFunds and Direxion families of funds.
    Here's a 3rd party page from 2013 that suggests the short term redemption fee on TF funds was $2.

    Not that the old fees matter any more. Currently, Scottrade charges a $49 short term redemption fee in addition to any other fees, including its $17 TF fee to sell.
    In addition to the commissions above, all no-load shares purchased from Scottrade and held 90 days or less will be charged a $49 short-term redemption fee. Exceptions to this short-term redemption fee are the Rydex, Guggenheim, ProFunds and Direxion families of funds, which are intended for short-term traders.
    FWIW, notice the shift in wording from NTF funds to all no-load shares.
  • Is it any cheaper anywhere else to sell a mutual fund within 90 days of purchase?
  • edited February 2016

    Is it any cheaper anywhere else to sell a mutual fund within 90 days of purchase?

    If you're talking brokerage fees, as Junkster is, Fidelity's NTF fee period is 60 days, not 90. Sell before 60 days, they charge $50. TF funds cost $50 one way (purchase only), with no penalty to sell anytime afterwards (unless, of course, there's a redemption fee charged by the fund company).
  • Vanguard Brokerage Services, like Fidelity, also imposes a $50 short term redemption fee for NTF shares sold within 60 days. There are some brokerages that do not add their own short term redemption fee to any that the fund might impose. When I posted on this three years ago, WellsTrade didn't add any short term fee of its own.

    This may be obvious, but you can avoid all brokerage fees by buying funds directly.

    You won't get access to institutional class funds that way (brokerages often reduce the min required), but if you're looking at short term positions, the 25 basis point difference between retail and institutional class shares won't add much to your costs.

    Check into the fund family's wire fees - they're likely less than the broker would charge for a short term redemption, and wiring should give you access to the cash just as fast as selling at a brokerage. For example, DoubleLine's wire fee is $15 - less even than Scottrade's old $17 short term redemption fee.
  • edited February 2016
    The difference with Vanguard is that the V. brokerage charges the NTF redemption fee on a last-in, first-out basis rather than the standard first-in, first-out basis.

    See the second sentence of this footnote -

    "9 The holding period begins on the trade date of the purchase. The redemption fee calculation uses last in, first out to determine the holding period. ..."

    - on the brokerage fee schedule page, under the "Mutual funds from other companies" tab.
  • Tradeking supposedly charges $9.95 to buy a no-load fund, and another $9.95 to sell one, regardless of the holding period. I contacted them a few years ago and was told that they charge no short-term redemption fees other than what an individual fund might charge for short-term trading. I've read that they offer 8000 funds. I've never bought or sold a fund through them, so can't vouch for their reliability. Their website seems to be down today, so maybe trying to trade funds through them would be a headache.
  • Luckily I am grandfathered into the Wells Fargo 100 free trades per year with a PMA account. This works well to get funds not otherwise available NTF, so the only fee would be whatever might be charged by the fund itself. No fees from the brokerage until that free quota is reached. 100 trades is per brokerage account, so IRAs and after tax accounts each get 100 and is more than enough for any DCA or regular deposits or withdrawals or early withdrawals if and when necessary.

    Not sure if they are going to remove that benefit in the future for the smallest change in any of the accounts.
  • franktrdr said:

    Tradeking supposedly charges $9.95 to buy a no-load fund, and another $9.95 to sell one, regardless of the holding period. I contacted them a few years ago and was told that they charge no short-term redemption fees other than what an individual fund might charge for short-term trading. I've read that they offer 8000 funds. I've never bought or sold a fund through them, so can't vouch for their reliability. Their website seems to be down today, so maybe trying to trade funds through them would be a headache.

    I think Scottrade is just coming more in line with its rivals. Tradeking is too obscure for my tastes. Just today and yesterday I paid out $160 more in fees to Scottrade than I would have prior to 2/1. In the good old days you could buy and sell funds with no fees whatsoever no matter how short your holding period. I had to adjust when they changed the rules to short term fees and will have to adjust again now that these fees have been raised.
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