I have just one question regarding the TD bond index fund. There is a penalty if you redeem within 90 days of buying the fund. However, since I am DRIPPing the fund every month, which means that I am essentially buying a couple of units of the fund every month --> does this mean that I will never be able to sell this fund entirely without incurring a penalty? After all, I would always have bought the fund within the last 3 months via the DRIP. Sorry, I have not had a chance to ask TD regarding this.
Any help is appreciated. Not that I want to sell everything right now.
I think you may have to ask TD about this. I DRIP TD e-Series Funds as well and in the past have rebalanced funds by selling and no early redemption fees were charged. I don't know what happens when you dispose the fund entirely though. I would assume that at most you'll be charged a penalty for the portion that was recently purchased, not the entire investment. More likely, I would think you won't be charged anything but I'm not sure about this.
From memory, selling units is on a FIFO basis, so you'll only be charged on the portion actually purchased within 90 days. If that's just from a DRIP, then it's a 2% penalty on a ~0.5% distribution, which is tough to distinguish from no penalty at all.
I would check with TD, but my experience with CIBC when I asked about withdrawing all units from funds that we purchased monthly was that there would be no penalty because of the regular investment plan. The explanation I was given is that the penalty is there to keep people from using the mutual funds to make short term trades trying to avoid brokerage fees. Long term regular investments didn't apply. YMMV.
I have been using TD funds for many years. The 90-day penalty applies to lump-sum new money. It does not apply to DRIP money or frequent purchase plan money (automatic monthly deposits). Can't remember, but I don't think it applies to lump sum purchases after the initial purchase.
Hey everyone, great conversation. My name is Stephanie and I’m from TD – Just wanted clarify that effective July 25th TD has changed its early redemption fee (ERF) period from 90 to 30 days. Also, units purchased as a result of a reinvested distribution are not subject to an ERF, but units purchased through a systematic investment plan are subject to an ERF. Hope this helps.
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