Vanguard Mutual Fund Conversion

LeaningTower
LeaningTower Member ✭✭
edited January 17 in Investing (Windows)
When I recently purchased additional shares of a Vanguard mutual fund, they "upgraded" my shares from Investor shares to Admiral shares (the only differences being a lower expense and different ticker symbol). At the suggestion of someone on this message board, I manually entered the change into Quicken as Mutual Fund Conversion because the Withdrawal and Deposit that were automatically entered in Quicken when downloading the transactions showed in reports as cash transactions, which generated a taxable event.

The Mutual Fund Conversion menu option created a Shares Removed entry and a few dozen Shares Added entries. A cursory review of the shares added entries looks like Quicken probably created a separate transaction for each purchase and each Dividend reinvested transaction.

Can anyone confirm if this is correct? And if this method of entering the change in the mutual fund will create any other problems or issues for me down the road in reports or anything else?

Thanks

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    That is the methodology. Each new added lot Carrie’s the basis and acquisition date of the investor class lot. 
    Should not be any issues unless you had Average Cost assigned to old investor class shares. 
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    If you verify the cost basis and original purchase dates are correct for each Add Shares transaction you should be fine. The Remove/Add is the technically correct way to do it, but not always necessary.

    The simplest method IMO is to go to the Security List, Edit Details and use Lookup to change the ticker symbol and security name. This will re-label the transaction history of Investor shares with the Admiral shares and new transactions will be added as Admiral shares. Delete the unneeded downloaded transactions cash transactions.

    Usually after the first download with Admiral shares holdings, you get a prompt asking if this is a new security, if you say No and choose the Investor class holding as the same, the tickers will be linked automatically. You still will want to verify in Security Details the new name and ticker are displayed.

    Once you have created the new Admiral security it's not as simple. You would need to delete the newly created Admiral shares security and any entered transactions of the Admiral shares before making the changes above. If you still hold shares of the Investor class in another account, then the remove/add process is the only option.
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    @markus1957,
    The security renaming approach you recommend will work if the share prices for the two classes are identical or nearly so. This is often the case with Vanguard funds, but sometimes the prices are significantly different. For example, Vanguard 500 Investor VFINX is $369.10 and Admiral VFIAX is $369.06. But Vanguard Wellington Investor VWELX is $39.62 while the Admiral shares VWENX are $68.42.  

    If the prices are different, you will receive a different number of shares in the new class than the old.  In that case, the number of shares in each tax lot must be adjusted to reflect the difference. The Mutual Fund Conversion does this for you, but simply renaming the security does not.
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  • LeaningTower
    LeaningTower Member ✭✭
    Thank you everyone who responded.

    If anyone else has input, I'd be open to additional info, options and opinions
  • CJForb
    CJForb Member ✭✭
    I am performing the same update, albeit after the fact. On 4/13/21 TDA indicates on statement JSOCX underwent a SHARE CLASS EXCHANGE to JSOAX. Quicken's entries that were accepted were a 'remove' of JSOCX and an 'add' of JSOAX. I did accept them way back then, but realize now that my cost basis is zero --- so need to correct that. The MUTUAL FUND CONVERSION sounds good by your explanation above. BUT I DID ALREADY accept the downloads for add and remove way back that are on file dated 4/13/21. So when I attempt the conversion now I get an error that states the security doesn't exist. So if I remove the two originally downloaded transactions dtd 4/13/21 (remove and add entries) it will probably allow me to do the conversion. BUt in the meantime what will happen to all of the individual div reinvest entries I have from 4/13/21 to now for the new JSOAX if I remove the add of it from 4/13/21?
    Thank you for your input in advance.
  • CJForb
    CJForb Member ✭✭
    And to provide further information: I do NOT have the 'average' box checked in the security detail.
  • CJForb
    CJForb Member ✭✭
    @jim-harman you seem to be the best person to field my above question extension of the mutual fund conversion scenario
  • CJForb
    CJForb Member ✭✭
    @Jim_Harman you seem to be the best person to field my above question extension of the mutual fund conversion scenario
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited January 31
    @CJForb
    If you want to change the downloaded transactions to a Mutual Fund Conversion, you should

    back up your data file just in case

    delete the downloaded transactions and any others you have entered to try to compensate for them

    Enter the Mutual Fund Conversion
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  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    BUt in the meantime what will happen to all of the individual div reinvest entries I have from 4/13/21 to now for the new JSOAX if I remove the add of it from 4/13/21?
    Nothing will happen to those later transactions. You will be fine.