eserving a slot in one of the leading no-transaction fee (NTF) fund program is no longer a cut-and-dried decision. Proof of the change is provided by the recent decision of American Century
to drop out of the Fidelity
NTF program. The Kansas City-based fund firm is continuing to make its fund available through all of Fidelity's fee-bearing programs. It is also offering a grandfather period for shareholders who initially used through the program.
American Century officials have not explained the specific reasons for the decision, although it was clearly driven by economics. "We are continuously evaluating all of our distribution channels," said spokesperson Laura Kouri.
The move comes as fund officials are buzzing over the recent decision by Charles Schwab to raise its revenue share for funds participating in its NTF program to 40 basis points from 35. Sources at fund firms have told the MFWire.com that Fidelity's current revenue share is 35 basis points and Fidelity has said it has no plans to change that figure. Each agreement with fund firms is negotiated separately. A longtime industry bit of conventional wisdom holds that firms with strong brand names are able to negotiate lower fees with platforms.
A check of the Schwab site this morning should that American Century is still available on an NT basis there. Kouri confirmed that American Century has no plans to change its distribution through Schwab.
A published report contends that American Century decided to pull out of the Fidelity program after asking the fund supermarket to drop its revenue share to 30 basis points from 35 basis points. That report offers no on-the-record sourcing for the claim.
What is confirmed is that American Century is converting its fund distribution from a direct to an advisor-sold model. As part of that effort the firm launched Advisor shares for 10 of its funds earlier this month.
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