Shareholders wishing to trade in and out of two Harbor Funds had better step quickly if they want to avoid paying an extra fee. Toledo, Ohio-based Harbor Fund said that it is adding a redemption fee of two percent on short-term trading in its International Fund and International Growth Fund.

The move is a reaction to attempts by arbitrageurs to take advantage of moves in overseas stock markets by trading in and out of the funds, explained David G. Van Hooser, chairman of the board of trustees. He noted that the trading raises the costs of the funds for all shareholders and that the fee was meant to reimburse the fund of those costs.

Harbor is not the first to try to battle arbitrageurs by implementing a redemption fee. Perhaps the highest profile firm to do so was Vanguard. While redemption fees are one path that fund firms have taken, others have tried to cut the rewards to be gained by adjusting their NAVs to account for likely price shifts following moves in foreign markets.

The new redemption fee at Harbor Fund will take effect on Friday, August 1. It will not apply to shares purchased prior to that time.  

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