R6 Shares NOW Available
- May 09, 2013
- Written by Retirement Marketing, Franklin Templeton Investments
Franklin Templeton has introduced a new R6 share class for employer-sponsored retirement plans. The R6 share class will be added to 59 of Franklin Templeton’s U.S. retail funds, primarily those that are currently on defined contribution investment-only (DCIO) platforms or that have been earmarked as of potential interest to the DCIO market.
“Franklin Templeton has been providing investment vehicles for retirement plans for over six decades,” said Yaqub Ahmed, SVP and Head of Investment-Only Division-U.S. “We have continued to enhance our product and share class offerings to meet the evolving needs of the employer-sponsored retirement plan market place.”
Here’s a few Q&A about this exciting new development.
Q: What are R6 share classes?
The R6 share class is primarily for employer sponsored retirement plans only (at the plan and/or omnibus level) and it will have no sales charges, no Rule 12b-1 fee and no third party servicing fees.
Q: Why is Franklin Templeton establishing R6 share classes?
In order to enhance fee transparency for qualified retirement plans, many plan sponsors now request that mutual fund families make available a class of shares (known throughout the industry as “R6”) that is a low cost, “no frills” share class. Specifically, Class R6 shares are designed for plan sponsors and other intermediaries seeking to externalize fees associated with the plan in lieu of having such costs bundled within the underlying fund’s expenses. These fees include 12b-1 fees and third party servicing fees.
Q: What portion of your total fund offerings do these 59 funds getting R6 shares represent?
We will be adding R6 shares for about 40% of our U.S. retail funds.
Q: Who are the eligible investors for R6 share classes?
The R6 share class will only be made available to employer sponsored retirement plans for accounts at the plan and/or omnibus level and funds within Franklin Templeton Investments (such as the fund-of-fund products within the Franklin Templeton Fund Allocator Series). Individual shareholders will not be eligible to purchase this share class.
Q: How do the R and R6 Share Class expenses compare to one another?
Both R and R6 share classes have no sales charges. Where they differ is on their 12b-1 fees and transfer agency (TA) Fees. Class R has a 12b-1 fee of 0.50% whereas the R6 share class has no 12b-1 fee. Class R has servicing fee reimbursements for payments to third parties while R6 will not have such fees. As a result, the R6 share class will have lower expense ratios.
Q: How do the Advisor and R6 Share Class expenses compare to one another?
The R6 share class fee structure will look similar to the Advisor share class as they both have no sales charges and no 12b-1 fees. What will differ is the R6 share class will not have servicing fees paid to third parties.
Franklin Templeton’s Defined Contribution Investment-Only (DCIO) team combines the capabilities of a world-class investment manager with specialized retirement expertise and resources. Dedicated retirement sales and service teams serve advisors exclusively within the DC plan marketplace, delivering “best-practice” management resources and proprietary value-added sales tools to help advisors build their retirement plan business.
For questions about this new share class or more information on how Franklin Templeton can help you with your DC business please contact your DCIO Specialist.