Mutual Fund Timing
 |
Definition of 'Mutual Fund Timing'A legal, but frowned-upon practice, whereby traders attempt to gain short-term profits from buying and selling mutual funds to benefit from the differences between the daily closing prices.Don't confuse market timing with mutual fund timing. Market timing is a very acceptable practice of trying to predict the best time to buy and sell stocks. |
 |
Investopedia explains 'Mutual Fund Timing'Mutual fund timing has a negative effect on a fund's long-term investors, as they will be subjected to higher fees due to the transaction costs of the short-term trading. In order to prevent this practice, most mutual funds impose a stiff short-term trading penalty, known as a redemption fee, upon the sale of funds that are not held for a minimum period of time, which generally ranges from 90 days to one year.In September of 2003, some mutual fund companies were investigated for permitting hedge funds to "time" mutual funds purchases. These hedge funds paid the mutual fund companies money for the right to buy and sell funds on a short-term basis without any short-term penalties. |
 |
Related Video for 'Mutual Fund Timing'
|
Related Definitions
Articles Of Interest
-
Trading The Odds With Arbitrage
Profiting from arbitrage is not only for market makers - retail traders can find opportunity in risk arbitrage. -
8 Reasons To Dump A Mutual Fund
Buy and hold is not forever. Find out when it pays to sell your fund and move on. -
An Introduction To Mutual Funds
Mutual funds are the starting point for many individual investors because they offer a balanced portfolio in a single investment. Find out how mutual funds work and whether they are the investment ... -
Canary Capital Partners: Anatomy Of A Scandal
Learn how a hedge fund scammed its way to profits and caught investors off-guard. -
What is arbitrage?
Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. This is considered riskless profit for the investor/trader. Here is an ... -
Can I sell mutual fund shares below their minimum intial purchase amount without being penalized?
Yes. You can freely buy and sell shares of a mutual fund regardless of any requirement for a minimal initial purchase amount or the application of a redemption fee. In this sense, the investment ... -
Mutual Fund Basics Tutorial
Learn about the basics - and the pitfalls - of investing in mutual funds. -
Quants: The Rocket Scientists Of Wall Street
Blend math, finance and computer skills to command a high - and well deserved - salary. -
Financial Career Options For Professionals
Find out if spreading your wings to try a new career will make you soar or fall flat. -
Women: Invest In Your Financial Literacy
Learning about money may seem intimidating, but it's not as hard as it looks.
Free Annual Reports
