Fidelity, Putnam to Use More Redemption Fees

As part of the effort to fight market timers, Fidelity Investments and Putnam Investments have decided to implement short-term redemption fees on more mutual funds in their lineups.

At Fidelity, 10 international funds in its Advisor series will start carrying redemption fees for shares purchased after March 31 of next year, according to Anne Crowley, a spokeswoman for the Boston company.

Five of those funds -- Fidelity Advisor Diversified International, Europe Capital Appreciation, Global Equity, International Capital Appreciation and Overseas -- will have 1% fees on shares sold within 30 days of purchase, while Fidelity Advisor Emerging Markets Income will have a 1% fee on shares sold within 90 days.

Subject to 2% fees are shares sold within 90 days in Fidelity Advisor Emerging Asia, Japan, Korea and Latin America.

Redemption fees are designed to discourage quick in-and-out market-timing trades while covering the costs incurred to the funds by such trades. Redemption fees are paid back to the funds, not to the fund-management companies.

Fidelity already has redemption fees on more than 100 funds in its lineup of 342 funds.

Meanwhile, Putnam is implementing a 1% redemption fee on two funds investing in high-yield bonds, Putnam High Yield Trust and Putnam High Yield Advantage Fund. The new fees will come into effect on Dec. 1, and affect shares sold or exchanged within 90 days of purchase, according to Putnam’s Web site.

Putnam, one of the companies at the center of the current trading-abuse scandal in the fund industry, has had short-term trading fees on its international and global funds.

Also Monday, Putnam said it had suffered a further $2-billion decline last week in its assets under management, to $245 billion, bringing the total decline for November to $32 billion. The latest week’s decline reflected a $3-billion drop in institutional assets, the No. 5 U.S. mutual fund company said on its Web site. The overall decline slowed from $9 billion a week earlier, it said.

Assets at Putnam fell nearly 12% in November after state and federal regulators accused it of fraud in connection with the probe into improper trading.