Oct. 8, 2002 — American Century Investments will add sales charges to some of its mutual funds early next year in an effort to increase sales through financial intermediaries.
The company will introduce Advisor class shares, which will be sold only through brokers, financial planners and other third parties, for nine stock and bond funds, and a money market fund, in February. The funds will also carry redemption charges. In addition, they will carry marketing and distribution, or 12b-1 fees, which compensate intermediaries who sell the products.
In announcing the switch, American Century noted that more than 85% of mutual funds are sold through intermediaries. “We want to do business with people in the way that they want to do business with us, whether that’s (directly) or working with a financial intermediary,” company spokeswoman Lauri Kouri said.
About 50% of the firm’s business comes from investors who purchase shares directly from the company, and third party sales generate 35%, Kouri said. Institutional and retirement plan sales account for the rest, she said.
The funds for which new share classes are being introduced have about $13 billion in assets, Kouri said. They include the $3.4-billion American Century Select/Inv (TWCIX), the $2.7-billion American Century International Growth/Inv (TWIEX), and the $1.9-billion American Century Value/Inv (TWVLX).
The charges and fees will also be added to new versions of two other stock funds, American Century Large Cap Value/Inv (ALVIX), and American Century New Opportunity II/Inv (ANOIX).
Advisor class shares will also be added to four fixed-income funds: American Century Diversified Bond/Inv (ADFIX), American Century High Yield/Inv (ABHIX), American Century High Yield Municipal/Inv (ABHYX) and American Century CA High Yield Municipal (BCHYX).
The ten funds “traditionally have been more popular with financial intermediaries,” Kouri said, adding that the company felt they also offered a diversified group of investments, which third parties had also asked for.
American Century has no immediate plans to add sales charges to its other funds, Kouri said.
Investor class shares of the ten funds will be closed to all investors on Jan. 30, 2003. Current shareholders will be able to continue to purchase shares directly from the company without paying charges if they remain invested on that day.