FAQ: Convert Share Class for Mutual Fund

Raymond Turner

Quote:" FAQ: Convert Share Class for Mutual Fund: I just found this thread. I also need to convert share classes in..."

 However, wouldn't these transactions muddle up the Investment Performance reports for the years involved? i.e. those lots that resulted from Dividends or CG reinvestments would now appear to be just additional purchases, thus not counted as investment income. Is there a solution for that?  

As originally noted, some performance metrics can be affected.  The impact that I see along the line you are inquiring is that the amount invested for the original shares will be different than the amount invested for the converted shares since the original shares had reinvestments and the converted shares are created through  ALL 'add shares' transactions.  That difference in amount invested will lead to differences in ROI and perhaps other parameters.   I do not know of a clean direct alternative approach.  Properly constructed, a report on Average Annual Return should be consistent and correct.  You need to choose what is meaningful to you and relevant to your data.  I do not see where this approach muddles up data 'for the years involved'.  The conversion - Remove and Add shares - takes place in current time at one day in time, not back when the original transactions were entered.  Again careful construction of reports across the conversion time is necessary to get meaningful results.  Reports for times before the conversion or after the conversion should not be affected.

Is Intuit ever to add a Convert Share Class transaction?
 Why do you ask other users what the corporate plans are?   Nobody posting here has any information relevant to your question.   Intuit does not share their future development plans.   I have seen Intuit employees post here that one of their development considerations is existence of a viable workaround.   It would not surprise me if Intuit rationalized that this approach represents a viable workaround for share class conversions, thus they would choose not to expend resources to develop a separate tool.   Note that any specific tool so developed has to address all the subtleties or carry all the flaws of the current workaround.   The more subtleties that are deemed necessary to address, the greater the development cost.

Thanks q.lurker.  I will give you suggestion a try.

q_lurker

On 10/22/07, Tod wrote: "If only certain shares are being converted within one account (say shares held longer than 5 years), the user may want to enter the Shares Removed and Shares Added transactions manually rather than through the Corporate Acquisition process."

An alternative to that manual two-entry process is to use a 'Shares Transferred between Accounts' transaction. The trick is to transfer the shares to the same account from which they currently reside. Specify the lots such that only the shares being converted are 'transferred'. Make sure the transfer account is the same as the originating account.

You will now have two transaction in this account - the 'Remove Shares' transaction should be fine as is, the 'Add Shares' transaction will need to be edited to change the name of the security being added (from Class A shares to Class B shares) and to adjust, if applicable, the number of shares of the Class B security being added. The acquisition date and cost basis for the added shares should be correct (matching the information for the shares just removed.)

The advantage of this approach is that the acquisition date and cost basis information are automatically generated by Quicken reducing the risk of error in the manual entries. Again, this technique is applicable only if a limited number of shares are being converted at one time. If all shares are being converted, the Corporate Acquisition approach is a more effective tool.

Unknown

I came up with an alternative:  First, there is an option to change the name of the stock.  After changing the name, I selected "stock split", substituting the new count for the old count.

Since this is within a tax-free IRA, I am not worried about maintaining historical records of basis.  Similarly, I have no problem with keeping separate track of deductible vs. nondeductible contributions.  But I think if you have a taxable account, these records would be maintained for you, since neither name changes nor stock splits affect the tax picture.  

I did enter a note in one of the memo fields as a reminder of what actually happend.

Jardon2

Many thanks!  From the description, it sounds like it will work.  I will try it tomorrow and let you know how it worked.  Presumably, a Security Report should be run to see all of the Accounts that may be affected by this global change.  In this manner, you will be able to assess the impact and determine which transactions should be deleted, if any.  In my case, all accounts should be processed.

Unknown

Many thanks!  From the description, it sounds like it will work.  I will try it tomorrow and let you know how it worked.  Presumably, a Security Report should be run to see all of the Accounts that may be affected by this global change.  In this manner, you will be able to assess the impact and determine which transactions should be deleted, if any.  In my case, all accounts should be processed.

Is there any way to select a bunch of transactions in an investment account to delete them.  This process works ok, but I end up with 100s of transactions that I have to delete in accounts with holdings in investor class shares that were not converted.  Any suggestions for speeding up this process?

q_lurker

Many thanks!  From the description, it sounds like it will work.  I will try it tomorrow and let you know how it worked.  Presumably, a Security Report should be run to see all of the Accounts that may be affected by this global change.  In this manner, you will be able to assess the impact and determine which transactions should be deleted, if any.  In my case, all accounts should be processed.

"Is there any way to select a bunch of transactions in an investment account to delete them. ... Any suggestions for speeding up this process? "

I believe you can generate a Banking Spending report and customize to include the relevant investment account.  From that report, you can select multiple transactions and Edit Button > Delete the selected transactions.  Back up first just in case.