Fundsters pondering their mutual fund fee cuts may want to take a look at the reaction to such a move by Pimco [see profile]. Today, via the "Fund Spy" column, Morningstar's Kailin Liu analyzed the Newport Beach, California-based bond fund giant's fee cuts from May 1 [see The MFWire, 3/11/2011], which slashed administrative fees by five to fifteen basis points in 66 share classes for 18 funds, including the mammoth Total Return Fund famously helmed by star PM Bill Gross.

Morningstar concludes that the move should save investors about $40 million per year and notes that the cuts are not restricted to "interest-rate sensitive offerings" alone (for which the return boost of cutting fees might be tempting). The fund ratings specialist concludes that, "regardless of motivation, Pimco's decision deserves recognition."

"Given the firm's prominence among fixed-income and institutional investors, it's fair to say that Pimco would likely have been able to forgo the fee cuts without doing any harm to its overall business," Liu writes.

Yet Morningstar also warns that Pimco "still has a long way to before being competitively priced across the board." 

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE