PIMCO’s Recent Fund Class Conversion

PIMCO recently announced that they will start to convert many of their class D share funds to class A. Class A funds are usually those that charge some percentage fees when one buys them – so called front load funds. Class D funds, on the other hand, do not charge anything extra for buying and selling — i.e. they are no load funds. PIMCO promises that the funds’ regular expenses will be the same. Furthermore, if investors already own a class D fund, after its conversion to class A fund, investors can purchase more without front load fee. For more information, see this link. There are also discussions in a Morningstar forum.

Some of popular PIMCO funds used in MyPlanIQ portfolios include PONDX (PIMCO Income D), PTTDX (PIMCO Total Return Bond D) and PSPDX (PIMCO StockPlus D).

The question now is that whether major brokerages like Fidelity, Schwab and Etrade can negotiate with PIMCO to allow their clients to purchase these A share funds without the front load fee (as funds’ new investors). Many times, brokerages negotiate with a fund company to carry so called load waived funds – i.e. even a fund is classified as class A share, it’s load will be waived. We are monitoring this situation as time goes.