Sponsors looking for more transparency and lower fees in retirement plan investment offerings have just been offered another choice, as J.P. Morgan Asset Management announced that it will now offer R6 share classes of the J.P. Morgan SmartRetirement Mutual Fund series of target date funds, which carry a Morningstar silver rating.
R6 shares, which provide lower fees for shares sold through defined contribution plans, are not available to retail investors, but are becoming more widely available. The demand for lower fees appears to be driving fund companies to add the share class to their DC offerings. Neuberger Berman, Franklin Templeton and MainStay Investments are just a few of the companies that chose to add R6 shares to retirement plan offerings in 2013.
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R6 shares are offered at net asset value with no front-end sales charges (CDSC) or 12b-1 fees. Clients will be able to purchase R6 shares immediately and can also make a direct exchange from previous share classes.
Managed by J.P. Morgan's Investment Management Solutions-Global Multi Asset Group, the new share class provides a nonrevenue sharing option for all sizes of DC retirement plans. R6 share classes are offered for all vintages in the SmartRetirement Mutual Fund series.
See also: Advisor share of DC assets growing
It would appear that R6 shares are winning friends among plan sponsors, so this may be a trend that's here to stay. Scott Kilgallen, managing director and head of the financial institutions group at Neuberger Berman, said this about them:
"Upon launching our R6 shares in response to client demands for increased transparency and flexibility in the retirement plan marketplace, the response has been strong — in under two years we've had over $4 billion in AUM move into our new share class either through transfers from existing plan sponsors or through new allocations."
Kilgallen continued, "The R6 shares offer a lower cost option to retirement plan advisers and their plan sponsors. Fee transparency is increasingly important to registered investment advisers, consultants and plan sponsors, so it made tremendous sense to add retirement share classes to some of our best performing and most popular mutual funds. We will be looking to extend the share class to more funds in our lineup."
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