MutualFundWire.com: Hold the T Shares?

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Tuesday, March 7, 2017

Hold the T Shares?

Asset managers and their wealth management allies are adapting to fiduciary reg limbo, at least in part by shaking up their evolving distribution plans for mutual funds.

Ben Phillips
Casey Quirk
Principal, Investment Management Lead Strategist

Thanks to the possibility of a White-House-pushed fiduciary reg delay, officially unveiled by the DoL last week, some mutual fund shops are putting on ice their plans to launch uniform-load T shares, Sarah Krouse and Michael Wursthorn of the Wall Street Journal report. Yet the article makes no mention of so-called clean shares, another new type of share class designed in part to adapt to a more fiduciary-full world.

A Morgan Stanley wirehouse memo, cited by the WSJ, says that thanks to the DoL's actions some fund firms have "delayed or suspended their efforts" to launch T shares. And Wells Fargo's wirehouse, the paper says, has not yet decided whether it will offer some mutual funds' T shares come April.

On the asset manager side, a Lord Abbett spokesperson says that the fund firm is still "moving forward" with its T shares plans. And Ben Phillips, principal at industry consulting shop Casey Quirk (part of Deloitte), tells the WSJ that "it's short-sighted for either broker-dealers or asset managers to abandon T-share efforts simply over uncertainty regarding the Labor Department's fiduciary rule."

As for clean shares, the folks at Capital Group make the case for active asset managers loving the development as a way to clean up their fees and performance. Their logic would seem to hold up even if the DoL rule gets delayed or goes away entirely, as active managers will still want ways to improve their fee structures and performance in their continued public fight against the rise of passive management. DoL rule or no DoL rule, fund firms still have to deal with the massive flows going into index funds and the outflows that have plagued actively managed funds.

Printed from: MFWire.com/story.asp?s=55849

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