• Skip to primary navigation
  • Skip to main content
Mullooly Asset Management, Inc

Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

  • Services
    • Wealth Management
    • Financial Planning
    • Retirement Planning
    • Investment
    • Estate Planning
  • Our Fees
  • About
  • 732-223-9000
  • Schedule A Meeting

Services

  • Wealth Management
  • Financial Planning
  • Retirement Planning
  • Investment
  • Estate Planning

Quick Links

  • About
  • Our Fees
  • Videos
  • Podcasts
  • Blog

Support

  • Contact
  • Client Login
  • Pay Bill Online
  • Form CRS
  • Our Process
Follow us on Facebook
Follow us on Linkedin
Follow us on Twitter
Watch On Youtube

Let’s talk

Mutual Fund A Shares: On Their Way Out?

November 24, 2014 by Brendan Mullooly, CFP®

In the last week or so, I’ve read several articles about the downfall of A share mutual funds. If you don’t know what an A share mutual fund is, Tom and I have discussed A, B, and C share mutual funds in a previous podcast that you can check out here: https://mullooly.net/understanding-c-shares-what-you-need-to-know/7368 To briefly summarize the A share mutual fund: they typically charge a front-end sales load between 4-6%. This means a portion of the money you pay to own the mutual fund isn’t getting invested. Instead, it pays a commission to the broker who sold it to you and their firm. While they profit, you begin your investment in this fund already down 4-6%. Hopefully this isn’t news to you!

The fact that fewer of these funds are being sold to investors is something to celebrate, in my opinion. Here at Mullooly Asset Management we invest in no-load mutual funds and ETF’s. We’re fiduciary investment advisors and never make a sales commission off any financial advice we give to our clients. We believe that commissions create an inherent conflict of interest when it comes to investment advice. Example: “Why yes, Mr. and Mrs. Jones you should buy this A share mutual fund that will pay me 5%, instead of a no-load mutual fund that will accomplish the same investment objective.” It probably won’t be phrased quite so plainly, but you get the point.

Kris Venne, a CFP with Ritholtz Wealth Management recently wrote a post about A share mutual funds where he asked:

“Would someone please explain to me why financial advisors are still selling their clients A share mutual funds? How do these things even exist anymore?”

His feelings pretty accurately represent mine as well. Seeing accounts loaded up in A and C share mutual funds makes me sick. There are no-load funds out there that will provide them with a similar, if not identical, strategy for a lower cost.

An Investment News article recently shared some data on outflow from mutual fund A shares:

“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.”

Personally I think what could be the “worst year ever” for mutual fund A shares is one of the best possible things for investors. Hopefully this data means more investors are becoming aware of the high commissions being paid to brokers every year. Commissions that are eating away at their investment returns. It seems like we’re trending in the right direction here.

Sources:

http://www.investmentnews.com/article/20141121/FREE/141129983/brokers-push-to-fee-based-comp-slams-higher-cost-funds

http://krisvenne.tumblr.com/post/102895334120/zombie-investment-1-the-a-share-mutual-fund

http://www.finra.org/web/groups/investors/@inv/@protect/@ia/documents/investors/p125866.pdf

Never miss a post...and we deliver!

newsletter mailman

Get our updates delivered right to your inbox. Sign up today!

Success! Now go and check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

Filed Under: Asset Management, News Tagged With: mutual funds

About Brendan Mullooly, CFP®

Brendan Mullooly is a CERTIFIED FINANCIAL PLANNER™professional with Mullooly Asset Management, Inc.

1971 State Route 34, Suite 102
Wall Township, NJ 07719

  • 732-223-9000
732-223-9600
  • support@mullooly.net
  • Services
  • About
  • Our Fees
  • Contact
  • Form CRS
  • Videos
  • Podcasts
  • Blog
  • Client Login
  • Pay Bill Online
  • Our Process

The information on this website and blog do not involve the rendering of personalized investment advice. A professional advisor should be consulted before implementing any of the options presented. None of the content contained in this website should be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

© 2022 Mullooly Asset Management Inc. All Rights Reserved.

  • Privacy
  • Disclosures and Legal Disclaimers
  • Privacy
  • Disclosures and Legal Disclaimers

© 2022 Mullooly Asset Management Inc. All Rights Reserved.