Mutual Fund merger

growltiger132

My investment broker merged a mutual fund into another fund so that I ended up in a new fund that has more shares at a lower cost. The amount of money in both funds is the same and the "Covered Shares Cost Basis Method: Average Cost". How do I handle this in QUICKEN?

NotACPA

What 2 mutual funds? 

And what Q product are you running ... and what BUILD of that product?  Do HELP, About Quicken for this info.

Different Q products have different ways to do this.

growltiger132

I am running Quicken Subscription, Premier, Version R31.2, Build 27.1.31.20

NotACPA

Thanks for the Q info ... but what funds were involved?

Also, where in Q did you find the phrase "Covered Shares Cost Basis Method:"?

growltiger132

T Rowe Price Growth and Income fund was merged into the T Rowe Price US Large-Cap Core fund. The phrase was from the fund merger information provided by T Rowe Price. They used my cost basis for the Growth and Income fund for the cost basis of the US Large-Cap Core Fund.

q_lurker

Does your security in Quicken show that you are using average cost (See Edit Security Details for the fund)?

If so, have you ever sold shares of that fund using the average cost designation?

Do you care about tax information that Quicken might be able to provide?  (Capital Gains information in particular.)

If you are using Quicken's option to use average cost, AND you have sold shares, THEN transferring the shares from one fund to a different fund may not track capital gains accurately or more laborious measures may be necessary to get capital gains to be accurate.   

growltiger132

I got sidetracked from Quicken for a while so am late getting back to you. I have not sold any shares in the first fund but have 15 yrs of reinvested dividends and capitol gains. Both Quicken and my the mutual fund use average cost for the cost basis. I updated to the latest version of Quicken Premier and tried using the Mutual Fund Conversion function in Quicken, but it still does not compute the cost basis correctly. Is there another way to merge the two funds without manually correcting over 130 entries?

q_lurker

I would suggest since you are committed to the Average Cost approach, you can reduce this conversion to two transactions:

1. Remove Shares -- all shares of the T Rowe Price Growth and Income fund.  Note the total cost basis and the latest date acquired.
2. Add Shares -- T Rowe Price US Large-Cap Core fund, total number of shares that your old fund was converted to.  With the Add Shares transaction, you specify the Cost of those shares and the Date Acquired.  Use the info from the old fund (step 1).

I am not sure how the conversion did not get the cost basis correct.  Doesn't really matter.

Using this approach, IF the acquisition date is 'recent' AND you sell some shares before a year has passed after that recent date, Quicken will end up computing the sale as a short term capital gain.  Your brokerage is more likely to show it as a long term gain.  This approach also takes away any future option to not use average cost.     

Jim_Harman

@q_lurker there is a well documented problem with Mutual Fund Conversion if the old fund is set to Use Average Cost. If there are n tax lots in the old fund, the converted fund is given a cost basis of n * the original cost basis.

See this Idea post
https://community.quicken.com/discussion/7861196/fix-mutual-fund-conversion-so-cost-basis-is-correct-if-holding-is-set-to-use-average-cost

q_lurker

@Jim_Harman Thanks for the reminder.  Too many bad neurons, not enough Post-it notes.

NotACPA

q_lurker said:

@Jim_Harman Thanks for the reminder.  Too many bad neurons, not enough Post-it notes.

That's because there's a finite amount of space on your monitor to stick them.