Redemption refers to the process of selling or liquidating an investment to retrieve the invested capital. It is commonly associated with mutual funds, exchange-traded funds (ETFs), and other types of investment vehicles where investors pool their money together.

When an investor wants to redeem their investment in a mutual fund or ETF, they typically submit a redemption request to the fund management company. The company then sells the underlying securities in the portfolio to generate the necessary funds for the redemption. The investor receives the redemption proceeds, which may include the initial investment amount plus any gains or losses.

Redemption in the stock market can also refer to the act of repurchasing outstanding bonds or shares of a company by the issuing entity. This can occur when a company wishes to reduce its debt burden or decrease the number of outstanding shares.

It's important to note that redemption in the stock market can have different implications depending on the specific investment vehicle or context. Investors should carefully review the terms and conditions, including any associated fees or restrictions, before initiating a redemption request.