Redemption

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Chapters in this video

  1. 0:00 Cashing out at NAV: the fund is your buyer
  2. 1:05 Seven calendar days: the exam's favorite trap
  3. 2:40 CDSC calculated on lesser of purchase price or NAV
  4. 4:21 Systematic withdrawal plans and the churning trap
  5. 6:00 Class B to Class A conversion: tax-free relief
  6. 7:21 Rapid-fire exam recap

What this video covers

  • Why mutual fund redemptions occur at net asset value (NAV) directly with the fund, not on an exchange, and the strict 7-calendar-day payout rule
  • How the contingent deferred sales charge (CDSC) is calculated on the lesser of original purchase price or current NAV, never the higher amount
  • Why first in, first out (FIFO) matters for CDSC calculations and how reinvested dividends and capital gains dodge the charge entirely
  • The four systematic withdrawal plan types (fixed-dollar, fixed-share, fixed-percentage, fixed-time) and why simultaneous purchases with withdrawals is unsuitable churning
  • The Class B to Class A conversion timeline (typically 6-8 years), the 12b-1 fee drop (from 1.00% to 0.25%), and why conversion is not a taxable event

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Read the Free Lesson → free · no signup wall