Broker Check
Did you know?

Did you know?

August 30, 2022

After the mortgage crisis of 2008 - 2009, regulators have gotten serious about making changes so that nothing like it ever happens ago.  As always, regulations don't solve everything, but they can do some good.

I recently received an email alerting me that Kestra Financial, my broker dealer, is going to be converting share classes during their annual process.  Share classes dictate how expenses are paid by owners of a mutual fund.  For example, three common share classes are A shares, B shares, and C shares.  Using this example, investors can own the same mutual fund, which invests in the same underlying investments, and have three different ways to pay the fund operating expenses.  A financial advisor should help determine which class is appropriate and we'll leave that topic for another blog.

An annual share class conversion is just one of the ways in which our regulators are trying to keep expenses as low as possible for investors.  During this process broker dealers are required to examine share classes held by their member firms to see if there's a less expensive class available.  If there is, the shares are converted to the lower cost share class without creating a taxable event.  A definite win for investors and one positive result of regulations.