Mutual fund exchange

Ann R
Ann R Member
edited April 8 in Investing (Mac)
I have Mac subscription version How do I record a swap of one mutual fund version for another. No money involved and same number of shares. There is no Mutual Fund swap option in my version.

Best Answer

  • jacobs
    jacobs SuperUser, Mac Beta Beta
    Accepted Answer
    The answer is that there's no tool in Quicken Mac to automate the details of such a transaction, and it depends on the level of precision you want in your records on how to proceed.

    The basics: you use Remove Shares and Add Shares transactions to make the shares in the old security disappear and shares in the new security appear. At the simplest, you can do a single Remove Shares transaction of the old security, and a single Add Shares transaction of the new security. The problem with that simple approach is that all your shares will be added on a single date with a single cost basis. So your next questions are going to revolve around how long you've held the old security, how many transactions it's had (buys, sells, reinvested dividends), and how important preserving the precise history is to you.

    Let's start with the latter. For tax purposes, you may only care that any future sales of this security show up a long-term rather than short-term gains. If you're not planning to sell the shares soon, that may not be an issue, and you could create a single Add Shares transaction and be done with it. But if you want to see your investment history accurately documented within Quicken, then you'll have more work to do.

    If you don't have a ton of transactions for this security, the most precise and accurate way of handling it is to create a separate Add Shares transaction to duplicate every past Buy and Reinvest transaction; with Add Shares, you can record the date of the transaction as the date of the fund conversion, but you also have a field to record the date of acquisition, which is where you'd enter the date of each original transaction. (Your path is at least easy because the shares were exchanged 1 for 1; often these types of conversions have different shares in the new class, and you have to calculate the share amount for each transaction.) If you have hundreds of transactions for this security, then you may want to consider simplifying the process by, for example, grouping all the dividend transactions per year into a single Add Shares transaction.

    Also factoring in your decision about whether to do this a transaction at a time or not is whether Quicken is accurately calculating the gains in the account which holds this security correctly. My mutual funds at Vanguard are calculated on an Average Cost Basis, and (to my considerable annoyance) Quicken Mac only offers LIFO or FIFO, but not Average Cost Basis, for cost basis. As a result, when I had some of these class changes of securities, I didn't spend time doing the meticulous transaction-by-transaction approach to Add shares, because Quicken will never give me my precise cost basis/gains due to using a different calculation method; I will always use Vanguard's calculation of my realized gains -- so I decided that entering all the Add Shares transactions wasn't worth the effort.
    Quicken Mac Subscription • Quicken user since 1993

Answers

  • jacobs
    jacobs SuperUser, Mac Beta Beta
    Could you clarify what you mean by swapping a "mutual fund version". Are you talking about moving a mutual fund from one broker to another? Or a change in mutual fund classes (like Vanguard switching from Investor shares to Admiral shares)?
    Quicken Mac Subscription • Quicken user since 1993
  • Ann R
    Ann R Member
    It is a chane in classes and thus in name.
  • jacobs
    jacobs SuperUser, Mac Beta Beta
    Accepted Answer
    The answer is that there's no tool in Quicken Mac to automate the details of such a transaction, and it depends on the level of precision you want in your records on how to proceed.

    The basics: you use Remove Shares and Add Shares transactions to make the shares in the old security disappear and shares in the new security appear. At the simplest, you can do a single Remove Shares transaction of the old security, and a single Add Shares transaction of the new security. The problem with that simple approach is that all your shares will be added on a single date with a single cost basis. So your next questions are going to revolve around how long you've held the old security, how many transactions it's had (buys, sells, reinvested dividends), and how important preserving the precise history is to you.

    Let's start with the latter. For tax purposes, you may only care that any future sales of this security show up a long-term rather than short-term gains. If you're not planning to sell the shares soon, that may not be an issue, and you could create a single Add Shares transaction and be done with it. But if you want to see your investment history accurately documented within Quicken, then you'll have more work to do.

    If you don't have a ton of transactions for this security, the most precise and accurate way of handling it is to create a separate Add Shares transaction to duplicate every past Buy and Reinvest transaction; with Add Shares, you can record the date of the transaction as the date of the fund conversion, but you also have a field to record the date of acquisition, which is where you'd enter the date of each original transaction. (Your path is at least easy because the shares were exchanged 1 for 1; often these types of conversions have different shares in the new class, and you have to calculate the share amount for each transaction.) If you have hundreds of transactions for this security, then you may want to consider simplifying the process by, for example, grouping all the dividend transactions per year into a single Add Shares transaction.

    Also factoring in your decision about whether to do this a transaction at a time or not is whether Quicken is accurately calculating the gains in the account which holds this security correctly. My mutual funds at Vanguard are calculated on an Average Cost Basis, and (to my considerable annoyance) Quicken Mac only offers LIFO or FIFO, but not Average Cost Basis, for cost basis. As a result, when I had some of these class changes of securities, I didn't spend time doing the meticulous transaction-by-transaction approach to Add shares, because Quicken will never give me my precise cost basis/gains due to using a different calculation method; I will always use Vanguard's calculation of my realized gains -- so I decided that entering all the Add Shares transactions wasn't worth the effort.
    Quicken Mac Subscription • Quicken user since 1993