Fidelity Investments said it plans to double the fee it charges investors who sell shares of its Small Cap Stock Fund less than 90 days after buying them.

Boston-based Fidelity will raise the redemption fee for the $588 million Small Cap Stock Fund to 1.5%, from 0.75%, according to the company. The fee increase will go into effect Nov. 15.

Many funds charge redemption fees as a way to protect themselves against a surge in shareholder withdrawals if the market tumbles. When investors redeem shares, fund companies must have cash on hand to reimburse them. This sometimes means funds have to sell stocks at unfavorable prices or borrow money from banks to cover redemptions.

Fidelity charges redemption fees for its Small Cap Stock, Low-Priced Stock, Emerging Growth, Real Estate, Spartan Market Index, and Technoquant Growth funds, among others, according to the company's monthly mutual fund guide.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.