Capital Research and Management's American Funds Group might offer class B shares. The $275 billion investment company, which offers 29 mutual funds, has asked shareholders to allow the new share class on seven of its more tenured funds.
"The decision to go ahead and [offer B shares] has not been made," says spokesperson John Lawrence. Shareholder meetings are scheduled for all seven funds this quarter. However, meetings held for the ICA and GFA funds failed to obtain a quorum. The firm is soliciting more proxy votes.
Industry observers say that American Funds, based in Los Angeles, would not have bothered to proxy shareholders if the intent was not to offer alternative share classes in the future.
"One doesn't go to shareholders at a cost, any cost, unless they want to potentially do something," says Geoffrey Bobroff, a mutual fund consultant in East Greenwich, R.I. "I wouldn't be surprised to see B shares being offered by American Funds come this spring."
American Funds is the only investment company of the top six broker-sold groups that doesn't offer B shares. Putnam, AIM, MFS, Oppenheimer and Alliance all do.
Bobroff says there's an old-school mentality at some investment companies and brokerage firms that A shares are better for the investor when they may not be. Over a longer horizon, putting more assets to work at a higher rate of return can outweigh the annual B share cost, he claims.
"Nobody wants to pay a load, and if they are invested for four or five years--do the math--they will have paid less than an upfront load," says one broker who sells a variety of share classes. "I don't know any broker who is comfortable with just an A share option."--Thomas M. Kostigen