Best practice for entering partial mutual fund share class conversion

DJE1

I have a mutual fund in a brokerage account that a portion of the fund shares have converted from Class C to Class A. In reviewing the available transaction types "Mutual Fund Conversion" appears to be an option however, I believe that it would convert all shares. Another option is to simply add/remove shares however, that misses up the  return, cost basis, etc. Is there any other options for this type of transaction.. I am using QFW subscription.

Sherlock

The wizards will insert a Removed action transaction for the shares being converted and an Added actions transaction for each lot of the converted securities to establish the cost basis.  The Mutual Fund Conversion wizard has been known to miscalculate the appropriate cost for the lots.  The Corporate Acquisition (stock for stock) wizard calculates the cost-basis accurately but processes the security holdings in all the accounts.  The options are to enter the transactions manually or use either wizard, delete the unwanted transactions, edit the number of shares removed, and adjust the costs if necessary.

Sherlock

DJE1 said:

Thanks Sherlock, I ran the Mutual fund Conversion and adjusted the shares removed. The shares and market value in the account for both fund classes are accurate. The Return YTD shows a large negative for the new share class. Appears I now need to edit the 11 added shares transactions to get the costs basis and returns correct. The detail is not on the online brokerage site. Any thoughts on how to adjust or should I wait for the brokerage statement.    

For the number of new funds shares to be accurate without introducing placeholder transactions, you also should have deleted the Added transactions for the lots that were not converted and specified the converted lots in the Removed transaction 

The adjustment isn't difficult; just tedious.  You enter the number of new shares and the current cost of the original lot into the Added transaction for each new lot and allow Quicken to calculate the price.  One way to view the current cost of the original lots is to temporarily set the Removed transaction's date one day later than the date of the conversion. Then select Holdings and set the As of: date to the date of the conversion.  You should be able expand the original security's holding to view the individual lots by selecting the plus sign in a box icon to the left of the security.

Sherlock

DJE1 said:

Sherlock, you lost me with the last paragraph. When you say "current cost" do you mean current cost basis or current share price?

I meant the current cost basis.  If you use the price to calculate the cost, there may be rounding errors.

Sherlock

The wizards will insert a Removed action transaction for the shares being converted and an Added actions transaction for each lot of the converted securities to establish the cost basis.  The Mutual Fund Conversion wizard has been known to miscalculate the appropriate cost for the lots.  The Corporate Acquisition (stock for stock) wizard calculates the cost-basis accurately but processes the security holdings in all the accounts.  The options are to enter the transactions manually or use either wizard, delete the unwanted transactions, edit the number of shares removed, and adjust the costs if necessary.

Jim_Harman

The issue with Mutual Fund Conversion in the current Quicken occurs when a mutual fund is set to Use Average Cost and there are multiple tax lots. Otherwise it is OK AFAIK.

DJE1

Thanks Sherlock, I ran the Mutual fund Conversion and adjusted the shares removed. The shares and market value in the account for both fund classes are accurate. The Return YTD shows a large negative for the new share class. Appears I now need to edit the 11 added shares transactions to get the costs basis and returns correct. The detail is not on the online brokerage site. Any thoughts on how to adjust or should I wait for the brokerage statement.    

DJE1

Thanks Jim, Neither fund is set to "use average cost"

q_lurker

DJE1 said:

Thanks Sherlock, I ran the Mutual fund Conversion and adjusted the shares removed. The shares and market value in the account for both fund classes are accurate. The Return YTD shows a large negative for the new share class. Appears I now need to edit the 11 added shares transactions to get the costs basis and returns correct. The detail is not on the online brokerage site. Any thoughts on how to adjust or should I wait for the brokerage statement.    

If only some of the lots (the older ones?) were converted, those related Add Shares transactions should be correct as is with respect to cost basis.  The Add Shares for unconverted lots would need to be deleted.  Those should be the only "edits" required (but read on).  

It is my personal policy in such conversions to make sure the converted shares are as precise as I (and the brokerage) choose -- typically to three decimal places.  As such, I choose to go though those Add Shares transactions and manually round the number of shares to that level of accuracy making sure not to change the overall total shares. 

The Return YTD shows a large negative for the new share class. 

When did the conversion take place (this year or last)? 
Did you otherwise own shares of the new class at the beginning of this year?

Return YTD equals
Market Value ---------  (Current price x current shares)
+ Cash Income ------- (Dividends, most commonly)
+ Sale Income -------- (Gross proceeds of any sales YTD)
-  Amount Invested -- (Market value of shares owned 12/31/20)
-  New purchases ---- (Cost of any new shares acquired since 12/31/20)

For Added Shares, they are treated as being added at their cost basis, so if that value is higher than their  current market value, their contribution to Return YTD will be negative. 

Sherlock

DJE1 said:

Thanks Sherlock, I ran the Mutual fund Conversion and adjusted the shares removed. The shares and market value in the account for both fund classes are accurate. The Return YTD shows a large negative for the new share class. Appears I now need to edit the 11 added shares transactions to get the costs basis and returns correct. The detail is not on the online brokerage site. Any thoughts on how to adjust or should I wait for the brokerage statement.    

For the number of new funds shares to be accurate without introducing placeholder transactions, you also should have deleted the Added transactions for the lots that were not converted and specified the converted lots in the Removed transaction 

The adjustment isn't difficult; just tedious.  You enter the number of new shares and the current cost of the original lot into the Added transaction for each new lot and allow Quicken to calculate the price.  One way to view the current cost of the original lots is to temporarily set the Removed transaction's date one day later than the date of the conversion. Then select Holdings and set the As of: date to the date of the conversion.  You should be able expand the original security's holding to view the individual lots by selecting the plus sign in a box icon to the left of the security.

DJE1

q_lurker...the conversion took place this year and I already owned shares in the new fund class. Thanks for your assistance.

DJE1

Sherlock, you lost me with the last paragraph. When you say "current cost" do you mean current cost basis or current share price?

Sherlock

DJE1 said:

Sherlock, you lost me with the last paragraph. When you say "current cost" do you mean current cost basis or current share price?

I meant the current cost basis.  If you use the price to calculate the cost, there may be rounding errors.