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Wells Fargo Advantage Funds to Streamline Share Classes

This investor-friendly move will mean lower costs for most shareholders.

The board of the Wells Fargo Advantage Funds announced this week that it will convert all of the mostly higher-priced Investor share classes of its funds to lower-cost A shares.

The move is a positive one for investors. Eliminating 46 funds' Investor share classes will lower fundholder costs by 1-6 basis points, depending on the fund. While the Wells Fargo Advantage funds' expense ratios have been average overall, fully one third of the firm's share classes--including the Investor share classes of many funds--have Morningstar Fee Levels of Above Average or High. According to Morningstar data, 11.7% of all of Wells Fargo Advantage funds' assets currently are housed in Investor share classes.

For example,

Elsewhere, the A shares of

The share class conversion is scheduled to take place in late October. In a release, Wells Fargo said the conversion stemmed from a desire to streamline its share class offerings and also to provide more funds without front-end loads both to former Investor shareholders and to self-directed brokerage account investors. Morningstar has been critical of the relatively pricey share classes in the firm's Neutral Parent rating and Stewardship Grade of C.

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About the Author

Robert Goldsborough

Robert Goldsborough is an analyst covering equity strategies on Morningstar’s manager research team. He focuses on U.S.-equity sector open-end, closed-end, and exchange-traded funds, including real estate and master limited partnership funds.

Before joining Morningstar in 2010, he was a consulting equity analyst for Crystal Rock Capital Management. He spent seven years at Ariel Investments as an equity analyst and later as a vice president of research and a member of the firm’s Investment Committee. Before Ariel, he was an associate equity analyst for UBS Global Asset Management. He has also worked as a research associate for Kirk Tyson International, a freelance reporter for the Chicago Tribune, and an investigative reporting associate for WBBM-TV in Chicago.

Goldsborough holds a bachelor’s degree in modern languages from Knox College, a master’s degree in news management from Northwestern University’s Medill School of Journalism, and a master’s degree in business administration from the University of Chicago Booth School of Business.

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