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Post by Admin/YBB on Jan 6, 2022 17:08:08 GMT -6
Fund families and brokers have various types of frequent-trading restrictions. Some funds may be exempt from these restrictions (e.g., all m-mkt funds; most bond funds at Vanguard; only ultra-ST bond fund FCONX at Fido) and some have vague rules and use them only to stop abusive practices (e.g. Schwab; I haven't run into any issues so far with frequent buys/sells for its ST bond fund SWSBX).
I have also found that most restrict round-trips (sell-and-buy or buy-and-sell), but multiple one-way trips are OK. For example, even very restrictive Vanguard has no issues if one keeps selling from fund A with proceeds going into funds B, C, D, etc. But a single purchase of fund A would ruin that as sell-and-buy makes it 1 round-trip.
Penalties for frequent-trading also vary, from warning to trading block.
These issues are different from those for brokers' NTF funds where there may be 60-90 day holding period restriction. If one violates those, transaction fees will be charged. Brokers keep track of shares that are/are-not restricted.
I am starting this thread so that members can post their experiences on frequent trading at various fund families and brokerages.
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Post by anitya on Jan 6, 2022 21:05:20 GMT -6
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