Redemption

AAA

DEFINITION of 'Redemption'

The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units in a mutual fund. A redemption occurs, in a fixed income security at par or at a premium price, upon maturity or cancellation by the issuer. Redemptions occur with mutual funds, at the choice of the investor, however limitations by the issuer may exist, such as minimum holding periods.

INVESTOPEDIA EXPLAINS 'Redemption'

Redemption of mutual fund shares from a mutual fund company must occur within seven days of receiving a request for redemption from the investor. Some mutual funds, may have redemption fees attached, in the place of a back-end load. It is important to note which units should be redeemed when choosing to sell mutual funds within a portfolio.

RELATED TERMS
  1. Mandatorily Redeemable Shares

    Shares owned by an individual or entity which are required to ...
  2. Authorized Share Capital

    The number of stock units that a publicly traded company can ...
  3. Run On The Fund

    A situation in which a hedge fund faces an increasing amount ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Systematic Withdrawal Plan - SWP

    A service offered by a mutual fund that provides a specific payout ...
  6. Gate Provision

    A restriction placed on a hedge fund limiting the amount of withdrawals ...
Related Articles
  1. Bond Call Features: Don't Get Caught ...
    Bonds & Fixed Income

    Bond Call Features: Don't Get Caught ...

  2. The Benefits Of ETF Investing
    Options & Futures

    The Benefits Of ETF Investing

  3. January: Time To Read Your Mutual Fund's ...
    Mutual Funds & ETFs

    January: Time To Read Your Mutual Fund's ...

  4. What's the difference between a load ...
    Investing

    What's the difference between a load ...

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center