This is another of those activities in the financial industry that scoots under the radar screen of most investors but could be hindering returns in your mutual funds.

Redemption costs are an offshoot of the market-timing scandal that hit the fund industry in 2003. Market timers-individual traders--use the fund to quickly buy and sell securities depending on rapidly changing market conditions, especially discrepancies between the US and international markets. In most cases market timing is legal, and sometimes it can boost the net asset value of a fund.

Our goal is to be in equity funds during a market rally and out when stocks turns south. But in almost every case we'll stick with funds for weeks or months until a trend dissolves.

However, the very short-term trading (one or two days) done by some fund owners leads to higher and higher redemption rates. When traders cash out their gains from market timing, fund managers must sell other securities to raise the money. That usually results in climbing brokerage and tax bills for other customers. Also, when traders jump in and out of a fund, the manager doesn't have a chance to put their cash to work for the benefit of all fund holders.

So it is a good idea to learn your funds' redemption rates. The best funds have single-digit or low double-digit rates. Some funds, on the other hand, have costly triple-digit rates. Most analysts think a good fund should have a redemption rat

Already, the industry is trying to head off the problem. For many funds there are fees of 1-2% on withdrawals made within three months of investing. Sometimes the fee is imposed for up to one year.

Naturally, the majority of timing takes place in aggressive funds containing volatile stocks that are subject to large price swings. International funds are also targets of market timers.

You can find out the redemption rates of your funds by checking the annual and semiannual reports at company's web site or at the Securities and Exchange Commission site, www.sec.gov. That will take more digging that most investors care to do, we think. In our opinion, it's better to call the fund and make an inquiry.

Once you get a clear picture of your funds' redemption rates, you can make an informed decision on whether the gains in the fund make possible higher costs acceptable.