Merging two mutual funds RRS feed

  • Question

  • Two of my mutual funds were just merged.  Fund B with a Share price on the date of merger of $15.66 was merged into Fund A, with a share price of $19.78.  The merger has no tax implications, so a Sell/Buy combination is not applicable.  What is the best way to handle this in Money to preserve the correct cost basis?
    Sunday, April 10, 2016 3:17 AM

All replies

  • In Portfolio Manager: Record a special activity - Record a merger.

    If the units were not exchanged one for one you will need the exchange share ratio.

    Sunday, April 10, 2016 11:40 AM
  • Thank you, but that only works with stock mergers.  My question involves the merger of two Mutual Funds.  At least in the US (Sunset) version, Mutual Funds are not listed in the dropdown of investments for merger.  So I repeat, how best to handle the merger of two mutual funds?
    Sunday, April 10, 2016 8:12 PM
  • The only convenient way I can find is to edit Fund B transactions in Portfolio Manager to reassign them - rename the fund - to Fund A.

    If the unit conversion is not one for one you will need to adjust the units. The Memo field can be used to note the reassignment. 

    Monday, April 11, 2016 7:19 AM
  • MERGING MUTUAL FUNDS WITH  CombineWith  (Money Plus and 2007 only)

    This is a method for use only with Microsoft Money 2007 and Money Plus for
    funds merging tax free in taxable account.  This method is used because Special
    Activity RecordAMerger is not available for mutual funds.

    Before proceeding, make an extra backup or copy of your Money file in case you
    want to undo something.

    Suppose Fund_A is the surviving fund and Fund_B shares become Fund_A

    Suppose you are to receive 0.7917 Fund_A shares for each Fund_B share that you
    hold.  Split the Fund_B shares 7917 shares for every 10000 shares. 
    The two split ratio numbers must each be integers less than 65536.  If your numbers do not give
    an easy ratio of integers, post the ratio you are trying to achieve. For example, if
    you said 0.7917087968 was the ratio, we would tell you to split the shares 783
    shares for every 989 shares.

    Then go to the Details page of Fund_B.  Click the CombineWith button, which is
    under the Rename button, on the upper right.  When you go to Fund_B details and
    click CombineWith, a list of mutual funds already defined comes up.  A pop-up
    tells you that all of this investment will be renamed as the other selected
    investment.  If you combine with Fund_A, in the register, All Fund_B
    transactions will now appear as Fund_A.

    Inspect the results.  Tell us how it went.  I did a test on a test file.
    However this method has not been used by many people, so maybe there is an
    aspect that I don't foresee.  It is probably OK, but caution is warranted for
    your Money.

    Monday, April 11, 2016 4:38 PM
  • Thanks Cal,

    Your method provides similar results to the one I used many years ago, which was a lot more work at the time, as it was pre Money 2007.  But looking back, I am not happy with the results as you lose all the detail data of Fund B.  So searching around I found an alternative on The Unofficial FAQ for microsoft.public.money  site (now on littlegreengecko.com) whose shortcomings, I find more acceptable to me, although I may regret it later.  And it is incredibly simple.  I did a Remove Shares from Fund B or all of the remaining shares.  I then did an Add Shares to Fund A equal to the number of Sares addes in the merger.  I used the previous Cost Basis of Fund B as the total and let Money determine the "price".  I haven't tried yet, but I think I can delete this price from the Price History to remove this anomaly without causing any problem.  Anyway, thanks again.

    Monday, April 11, 2016 7:12 PM
  • "I am not happy with the results as you lose all the detail data of Fund B."

    You keep all of the transactions. You keep the distributions. It is just that they are all treated as if those transactions are for Fund B. So yes, you lose the ability to separate Fund_B out in a report, but you keep all of the  performance and transaction info.

    A variation would be to modify the Memo field with a unique string for all of the transactions for Fund_B before doing the CombineWith. That said, mutual funds can use different basis methods than stocks. The fund companies today report a basis to you, which you don't have to use. But once you choose a method for a fund in an account, you have to stick to it. If you use that, you would replace what the fund company reports for what Money computes.

    The add/remove shares method does not seem to meet criteria of retaining the basis of the various lots. But maybe the CombineWith does not either. I think CombineWith would be closer, if close counts for anything.

    Also see the methods described in https://support.microsoft.com/en-us/kb/179585

    Monday, April 11, 2016 7:47 PM
  • Cal,

    Thanks for your insights.  For me (and i emphasize, for me) I find it too much trouble to deal with lots in Mutual Funds where most of the purchases are reinvestments of dividends or Capital Gains Distributions.  If I sell anything I accept the cost basis provided by the Mutual Fund company.  I use Money to track what is happening to my finances, not as a source for reporting (other than reporting on my Estimated Tax and withholding payments).  So, for my purposes the ability to keep the transactions for Fund B, both listed as having taken place in Fund B but also with the correct (unsplit) number of shares and price per share is more important to me than using Money to track the cost basis of individual lots.  For other, your compromise may be the better choice.

    Wednesday, April 13, 2016 3:37 AM
  • Pimco just got rid of their "D" class funds and converted them to "A" class.  So the scenario fits perfectly to what Cal Learner just said.  Long story short:  Cal's advice worked like a charm.  It's perfect.  Thank you, Cal!

    This was done with MS Money 2007.  Actually I started using Money when Microsoft included a free Money disk with a Compaq desktop that I bought. Longtime Money user, and I tried Quicken for 6 months and missed Money so badly that I went back to Money and entered those 6 months of data *manually*.  I miss Money and wish Microsoft would bring it back.

    Sunday, April 1, 2018 12:29 PM