Wells Fargo Advantage Funds to Streamline Share Classes
This investor-friendly move will mean lower costs for most shareholders.
The board of the Wells Fargo Advantage Funds announced this week that it will convert all of the mostly higher-priced Investor share classes of its funds to lower-cost A shares.
The move is a positive one for investors. Eliminating 46 funds' Investor share classes will lower fundholder costs by 1-6 basis points, depending on the fund. While the Wells Fargo Advantage funds' expense ratios have been average overall, fully one third of the firm's share classes--including the Investor share classes of many funds--have Morningstar Fee Levels of Above Average or High. According to Morningstar data, 11.7% of all of Wells Fargo Advantage funds' assets currently are housed in Investor share classes.
For example, Wells Fargo Advantage Discovery (WFDAX), which has a Morningstar Analyst Rating of Bronze, charges 1.22% for its A shares, garnering a Below Average feel level. The Investor class shares of the same fund, meanwhile, cost 1.28%, which is high enough for the price tag to be classified as Above Average.
Elsewhere, the A shares of Wells Fargo Advantage Municipal Bond (WMFAX), which has a Morningstar Analyst Rating of Silver, cost 0.76% and rank as Below Average, while that fund's Investor shares cost just 3 basis points more but have a High fee level.
The share class conversion is scheduled to take place in late October. In a release, Wells Fargo said the conversion stemmed from a desire to streamline its share class offerings and also to provide more funds without front-end loads both to former Investor shareholders and to self-directed brokerage account investors. Morningstar has been critical of the relatively pricey share classes in the firm's Neutral Parent rating and Stewardship Grade of C.
Robert Goldsborough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.