Exit Fee

DEFINITION of 'Exit Fee'

A fee or charge assessed to an investor for withdrawing money prior to a previously stipulated date. This is almost always expressed and charged as a percentage of assets rather than a flat fee.

May also be known as a "redemption fee", "back-end load" or "contingent deferred sales charge".

BREAKING DOWN 'Exit Fee'

Exit Fees may be found not only on mutual funds as back-end loads, but also on hedge funds, annuities and limited partnership units. Often the managers of these funds employ investing strategies that keep daily liquidity to a minimum, and the exit fees act as a deterrent to early withdrawals.

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