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Institutional funds- Cap gains and Dividends paid?
Old 01-07-2011, 11:46 AM   #1
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Institutional funds- Cap gains and Dividends paid?

DH has some retirement money tied up in a work related plan, and has mostly institutional funds. When I was looking at the transactions, most are not showing any dividends or cap gains credited. When I lookup those funds online, they appear to have paid dividends, but their share price is different when institutional, so I am confused.

3 examples of funds in the plans are: PIMCO Total Return Fund (Admin)-PTRAX, CRM Midcap Val Fd (Instl)-CRIMX and Touchstone Sands Capital Instl Growth Fd-CISGX.

Can someone enlighten me on this?
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Old 01-07-2011, 08:22 PM   #2
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Originally Posted by bizlady View Post
DH has some retirement money tied up in a work related plan, and has mostly institutional funds. When I was looking at the transactions, most are not showing any dividends or cap gains credited. When I lookup those funds online, they appear to have paid dividends, but their share price is different when institutional, so I am confused.

3 examples of funds in the plans are: PIMCO Total Return Fund (Admin)-PTRAX, CRM Midcap Val Fd (Instl)-CRIMX and Touchstone Sands Capital Instl Growth Fd-CISGX.

Can someone enlighten me on this?
the reason an investment company uses different share classes is so that it can award different fees and loads to different types of customers

sometimes you will see a different share class not make as much money because they are taking more fees out

often if you have 1,000,000 or you are in a large retirement plan with a particular institutional offering you will get the class with lowest fee

there are many variations --- consult the prospectus and you will see the break-downs
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Old 01-08-2011, 06:20 AM   #3
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These are probably not "institutional share classes" of the funds, but are the funds held in an insurance or annuity wrappers with extra fees. My spouse's 401(k) is like this. Look at the Summary Plan Description and other plan documents to find out.

What happens is that for a small annual charge of 1% to 2%, your husband's 401(k) hides all the details from the participants of dividends, distributions, capital gains and what not, and simply changes the price of the shares.

Example: Underlying fund has share price of $100 and pays a $2 dividend. For the 401(k), the share price goes to $101 since they take their cut. Your number of shares does not change.
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Old 01-09-2011, 11:37 AM   #4
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What kind of plan is it?

DW and I have had various employer sponsored plans -- 401K's and a 403B and don't recall seeing the dividends and capital gains -- just "number of units" and "unit value". I do not know what units are, but they are not shares.

We do have some institutional shares held in regular brokerage accounts (PRRIX - Pimco Real, and PTTRX - Pimco Total, for 2 examples), and while the fee structure is different from retail shares, they behave like retail shares, paying dividends and capital gains.
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Old 01-18-2011, 04:02 PM   #5
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Originally Posted by LOL! View Post
These are probably not "institutional share classes" of the funds, but are the funds held in an insurance or annuity wrappers with extra fees. My spouse's 401(k) is like this. Look at the Summary Plan Description and other plan documents to find out.

What happens is that for a small annual charge of 1% to 2%, your husband's 401(k) hides all the details from the participants of dividends, distributions, capital gains and what not, and simply changes the price of the shares.

Example: Underlying fund has share price of $100 and pays a $2 dividend. For the 401(k), the share price goes to $101 since they take their cut. Your number of shares does not change.
I had similar concern to OP's and looked into it and what I found was exactly as described above. It took Fidelity awhile to get back to me with an answer. Fortunately my (former) employer did not exploit the situation and the ER's were exactly the same as the publicly traded fund, so I guess it just depends on what kind of deal the employer cuts with the custodian. My new employer is not as generous (total plan assets are much much less) and I've noticed up to 30 basis point difference in ER between the old and new plans for the same fund. There is also a trend to what they call "Comingled Pools" which are "just like" a mutual fund, but they are NOT mutual funds (e.g. different reporting standard) which reduces cost. I assume the cost savings is consumed by the employer/custodian.
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