NEWPORT BEACH, Calif. (HedgeWorld.com)–Pacific Investment Management Co. LLC, stung by allegations it allowed market timing of its mutual funds, will institute a 2% redemption fee on short-term transactions in nearly all its funds beginning June 15, according to Securities and Exchange Commission filings.
Only PIMCO’s Money Market Fund will be exempt from the redemption fee.
In its filing, the company said the 2% fee is meant to serve as an additional deterrent to “abusive” and “excessive” trading.
“The trust discourages excessive trading made in response to short-term fluctuations in the price of fund shares, as well as other abusive trading practices that … may disrupt portfolio management strategies and harm longer-term shareholders,” company officials said in the filing. “In an attempt to further deter abusive trading, and to enable each of the funds to offset the potential trading and other costs … the trust is implementing redemption fees on each of its publicly offered Funds.”
Different PIMCO funds will determine when to apply the redemption fee based on various minimum holding periods ranging from seven days to 60 days, according to the filing. The redemption fee will be equal to 2% of the value of the shares being redeemed or exchanged.