Short-term Redemption Fee

C

Also known as back-end charges when the fund is sold as opposed to front-end charges when the fund is purchased.

The type of fee charged by a fund when it is sold and held for less than a specified time period is called a "deferred sales load."

A deferred sales load, also known as a back-end load or exit fee, is a fee imposed by mutual funds or other investment funds when an investor sells or redeems their shares within a specific timeframe. The specified time period is typically referred to as the "holding period" or "contingent deferred sales charge (CDSC) period."

The purpose of a deferred sales load is to discourage short-term trading and promote long-term investing. By imposing this fee, fund managers aim to discourage investors from frequently buying and selling fund shares, which can disrupt the fund's investment strategy and increase transaction costs.

The amount of the deferred sales load is typically a percentage of the value of the shares being sold. The specific percentage charged may vary depending on the fund and the length of time the investor has held the shares. Generally, the longer the investor holds the shares, the lower the deferred sales load percentage. After the specified holding period, the deferred sales load usually reduces to zero.

It's important to note that not all funds charge a deferred sales load. Some funds may have no sales charges or loads at all, which are referred to as "no-load" funds (option B). These funds allow investors to buy or sell shares without incurring any sales fees. In contrast, funds with deferred sales loads charge fees only when shares are sold within the specified holding period.

The other answer options mentioned in the question are not directly related to the fee charged when a fund is sold if held for less than a specified time period:

A. 12b-1: This refers to an annual fee charged by mutual funds to cover marketing and distribution expenses.

D. Management fees: These fees are charged by the fund manager to cover the costs of managing the investment portfolio.

E. Commissions: Commissions are fees paid to brokers or financial advisors for executing trades on behalf of investors.

F. Low-load: This term is not commonly used in the context of fees charged by funds. It could potentially refer to funds with lower sales charges, but it is not specifically related to the fee charged when a fund is sold before a specified time period.

Therefore, the correct answer to the question is C. deferred sales load, as it represents the type of fee charged by a fund when it is sold and held for less than a specified time period.