The Death of the A Share (and nobody cares)

As the retail brokerage model continues its steady decline into irrelevance, one of its cornerstone products, the mutual fund A share, now finds itself in the opening throes of a death rattle years in the making…

via Investment News:

The “A” share-class grouping — the largest among retail mutual funds — is largely made up of funds that assess an upfront sales charge that mostly gets paid back to the broker and their firm, as well as an ongoing fee used in part for the same purpose.

Outflows totaled $122 billion over the first 10 months of the year, Morningstar Inc. estimates. If that figure holds, it could be the worst year ever for that share class, topping the nearly $88 billion in redemptions during 2011. Morningstar started tracking the data in 1993.

Those flows compare with lower-cost institutional-class funds, which increasingly are available to retail advisers and brought in $230 billion in deposits, and no-load funds, which do not assess a sales charge and took in about $12 billion this year.

Good riddance to a relic of our less egalitarian past.

Source:

Brokers’ push to fee-based comp slams higher-cost funds (Investment News)

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The End of Mutual Funds is Coming (Fortune)