The Argument for Eliminating Extra Share Classes

August 5, 2014

by Michelle Perry Higgins

Start Shopping for Long-Term-Care Insurance at 45One thing fund companies could do to be more consumer friendly is to eliminate most of their share classes. The financial-services industry is moving toward a fee-for-service model where only one share class is really needed, as opposed to a commission for trades model with its A, B and C share classes. Many large fund families are already in this camp. And even fund families that do not offer loaded share classes are moving toward simplification. For example, recently Vanguard merged its “Signal” share class out of existence, eliminating a source of duplication and confusion. Simplification wherever possible is the friend of the consumer; complexity often results in confusion.