Mutual Fund Class change

Unknown

I have several mutual fund holdings in multiple retirement accounts that have been changed from Class D to Class A shares. These funds have reinvested dividends monthly for years. Mutual Fund Conversion recalculates the cost basis for each purchase but of course there are hundreds of transactions posted for each position and they are calculated to the 6th decimal place so the total number of shares does not equal the new share balance. What's wrong with simply removing the old shares and adding the new shares? These are IRA and 401k accounts so do I need accurate cost basis info? I presume not for tax purposes but yes if I want accurate rate of return calculations. A ton of work for a slight benefit in pricing!

Quicken Harold

Hello Paul, appreciate your question.

Which version of Quicken are you using?

Please let us know so that we can best help you.

Respectfully,
~ Quicken Harold.

Unknown

Quicken for Windows Premier 2018 R6.12 on Windows 7 Pro SP1.
Thank you.

Roger M

Hi, Paul,
I have the same scenario recently with a reclassified bond fund, and I believe I know exactly which mutual fund you are referring to. I also hold the fund in a tax deferred retirement account. What you suggest is exactly what I did. I removed all the shares of the old fund, and added shares of the new fund. The number of shares was slightly different, but that can be entered correctly when you add the new shares.

Unknown

I assume you're talking about the PIMCO conversion from Class D to A.  I think it depends on how your financial institution represents it in your download.  Mine did come down as an Add Shares and Remove Shares. 

I manually changed it to a Fund Conversion even though I have the fund in a Roth account.  I didn't want to lose the gain loss / return info.

Unknown

Yes, exactly. I have two PIMCO funds which converted and the download from Fidelity was Add/Remove Shares. I believe the "correct" way to handle this is Mutual Fund Conversion but it adds so many transactions and the correction doesn't convert to the correct number of shares...all for a couple of pennies per share. I know its to my advantage but is it worth the extra "stuff and inaccuracy?

Unknown

You could always use a Shares In or Out transaction to account for the small difference in the actual share balance.  

Roger M

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

q_lurker

Paul said:

Yes, exactly. I have two PIMCO funds which converted and the download from Fidelity was Add/Remove Shares. I believe the "correct" way to handle this is Mutual Fund Conversion but it adds so many transactions and the correction doesn't convert to the correct number of shares...all for a couple of pennies per share. I know its to my advantage but is it worth the extra "stuff and inaccuracy?

My choice in such situations:

Use the MF Conversion,

Edit each Add Share transaction to reflect the desired precision (I typically want three after the decimal point),

Round an appropriate transaction to get the correct final total number of shares,

Edit the Remove Shares transaction to take out the overstated market value (at least as best I recall that is the other necessary correction in some Quicken releases, an edit done in the transaction list display. I am not in a position to confirm that at this time.)


Thus my choice is to do that extra stuff. YMMV?

mrzookie

I did the MF conversion for 2 pimco funds that have 8-10 yrs of monthly reinvestments. came out within $.01 in both cases. I lost the actual ROI % (which is too often inaccurate anyway), but retained the history. 

Rocket J Squirrel

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

Yep, I see this too, even though the Mutual Fund Conversion seemed to work perfectly. I had zero share discrepancy and it all looked fine until you made me look at the Growth of $10k graph. Pretty crazy. I have dozens of transactions (monthly reinvests for years), and don't really want to have to re-enter them. I wonder whether there's another solution. Validate and Rebuild Lots didn't help.

Roger M

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

I know, that is crazy! I actually use that graph to gauge my performance against the indexes, and to look at buy & hold scenarios.

Unknown

Thank you for all the input. In one position, the discrepancy in the total number of new shares owned is 4 millionths of a share. I own two affected funds in three accounts with monthly distributions for 5 years so about 1500 separate lots that have different amounts of shares compared to the FI record, and the newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?

If I don't need the cost basis since this is a retirement account, and I can't get an accurate performance measure, what reason would I have for doing extensive tedious corrections?

Unknown

Paul said:

Thank you for all the input. In one position, the discrepancy in the total number of new shares owned is 4 millionths of a share. I own two affected funds in three accounts with monthly distributions for 5 years so about 1500 separate lots that have different amounts of shares compared to the FI record, and the newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?

If I don't need the cost basis since this is a retirement account, and I can't get an accurate performance measure, what reason would I have for doing extensive tedious corrections?

As I said...just do a Shares In or Out to get rid of the 4 millionths of a share.

Or you could do a Transaction Type of "Adjust Share Balance" to get to where you need to be. 

Or you could do as you proposed...just SELL all shares and BUY new shares.

Rocket J Squirrel

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

For anyone else running into this, there is a workaround. The problem is in the generated Remove Shares transaction. There's a number in there which represents either market value or cost basis of the shares, not sure which. This number is calculated wildly wrong, affecting the $10k graph. Fixing this single transaction got me a normal graph again.

Roger M

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

What do those numbers indicate? What value do we set it to?

Rocket J Squirrel

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

It appears to be the cost basis of the removed shares. That is the only number I could find which matched after I re-entered the transaction. If you re-entered the Remove Shares transaction already, you should see the correct number there.

Jim_Harman

Hopefully the fix below will resolve the problem of the wild swing in the Growth of $10k graph. Back up your data file first, just in case...

Select the Removed transaction for the old share class and look at the number in the box in the 2nd row of the Action column, below "Removed". This should be the value of your security on the date of the conversion (share price x # of shares). This "hidden" number is used in the Growth of $10k and average annual return (IRR) calculations. 

In QWin prior to 2018, this number was often wildly wrong, # of shares squared x share price or something like that. I thought they fixed it in 2018, but maybe the problem is back.

If the number is wrong, deleting and re-entering the Remove transaction may fix it, or you can simply type the correct number in this box and hopefully it will fix the problem.

Jim_Harman

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

It's not the cost basis, it is supposed to be the market value on the conversion date (share price of old share class x number of shares removed). See my comment below..

Rocket J Squirrel

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

All I know is that when I deleted and re-entered the Remove transaction, the number that Quicken placed in that field was the cost basis. Definitely not the market value.

Roger M

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

I agree with Rocket. I checked the number in the Removed shares transaction field, and it is definitely my cost basis, not the market value on the day of conversion. I removed the Add/Remove shares transactions, then re-entered the Mutual Fund Conversion transaction. The number in the Remove transaction field was way too high. I replaced it with my cost basis, and now the graph looks fine, as well as all the data.

q_lurker

Roger M said:

I tried adding a mutual fund conversion transaction. It worked, in that the correct number of shares was recorded. It only resulted in about 7 transactions, since I don't have that many lots. All looked fine until I opened up the Investing tab, and looked at the graph for "Growth of $10K". It showed a HUGE spike, on the order of a 1000% return. This, of course, is not right. So, I deleted the mutual fund conversion transactions, and re-entered the Add/Remove Shares transactions. Now the graph displays correctly.

I suppose that I don't care too much about cost basis, since this fund is held in a retirement account. But, it would be nice to show the correct rate of return before and after the conversion. I've owned the fund for a long time.

Typically, you want a match between that field and the total of the add shares values for cost basis. That way the IRR calculAtion has the same removed value as added value and there is no effect on IRR performance. So typically, that field for the Removed Shares would be cost basis. (There are times users have wanted or needed the added cost basis to be current market valu or some other value, thus the "Typically" qualifier.).


That is an IRR based answer I cannot currently comment about the effect on the 10K graph.

q_lurker

Paul said:

Thank you for all the input. In one position, the discrepancy in the total number of new shares owned is 4 millionths of a share. I own two affected funds in three accounts with monthly distributions for 5 years so about 1500 separate lots that have different amounts of shares compared to the FI record, and the newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?

If I don't need the cost basis since this is a retirement account, and I can't get an accurate performance measure, what reason would I have for doing extensive tedious corrections?

"newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?"

Though the date of the Add Shares transaction is current, within the data for the transaction is a "Date Aquired" field that will match the date that lot was actually acquired. "Edit" the transaction to see the specifics.

As for performance calculations, it depends on which calculation you refer to. IRR aka Average Annual Return for the composite of the two fund should be accurate even though the numbers for the two funds individually may be misleading.

Unknown

Jim Harman said:

Hopefully the fix below will resolve the problem of the wild swing in the Growth of $10k graph. Back up your data file first, just in case...

Select the Removed transaction for the old share class and look at the number in the box in the 2nd row of the Action column, below "Removed". This should be the value of your security on the date of the conversion (share price x # of shares). This "hidden" number is used in the Growth of $10k and average annual return (IRR) calculations. 

In QWin prior to 2018, this number was often wildly wrong, # of shares squared x share price or something like that. I thought they fixed it in 2018, but maybe the problem is back.

If the number is wrong, deleting and re-entering the Remove transaction may fix it, or you can simply type the correct number in this box and hopefully it will fix the problem.

Thanks, this worked for me!

Unknown

Paul said:

Thank you for all the input. In one position, the discrepancy in the total number of new shares owned is 4 millionths of a share. I own two affected funds in three accounts with monthly distributions for 5 years so about 1500 separate lots that have different amounts of shares compared to the FI record, and the newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?

If I don't need the cost basis since this is a retirement account, and I can't get an accurate performance measure, what reason would I have for doing extensive tedious corrections?

Got it - I see the date acquired for tax purposes...thanks. How do you handle the discrepancies in millionths of shares on each of hundreds of share lots created by the conversion? If I sell partial positions, I'm going to have numerous loose ends where the number of shares doesn't agree with the FI.

q_lurker

Paul said:

Thank you for all the input. In one position, the discrepancy in the total number of new shares owned is 4 millionths of a share. I own two affected funds in three accounts with monthly distributions for 5 years so about 1500 separate lots that have different amounts of shares compared to the FI record, and the newly entered lots have the date of the conversion, not the original purchase date. Doesn't this mean any performance calculation must be not valid?

If I don't need the cost basis since this is a retirement account, and I can't get an accurate performance measure, what reason would I have for doing extensive tedious corrections?

How do you handle the discrepancies in millionths of shares on each of hundreds of share lots created by the conversion? 

I've never had this issue on a holding with "hundreds" of lots.  For the securities I have had as multi-lot holdings (perhaps 100 - 150 lot very max, monthly for ~10 years?) I would still have gone through and edited each one down to my preference on precision (0.001 share).  If needed, I would also arbitrarily choose one or two to round differently to get to the total shown by the MF family.  My preference is to match the precision shown by the MF on its most precise reporting.

PhilipJD

Jim_Harman

q_lurker