A Redemption Fee is typically a charge that’s imposed on people who redeem their shares within a short period of time. It might be 90 days or 3 years. Some funds impose a .25 percent redemption fee no matter when you cash out. Why? This is another way for funds to be profitable. But there may be some additional costs if too many people take their money out at exactly the same moment. Funds have to keep some money in cash reserves in case people want to redeem their shares. If too many people want to redeem their shares all at once, the fund would have to sell some stock, perhaps at not the most fortuitous time.