Prudential Investments joins the fee-cut bandwagon

Asset manager cuts expenses on nine mutual funds, after a string of ETF fee cuts by Fidelity Investments, Charles Schwab and BlackRock

Oct 18, 2016 @ 9:45 am

By Jeff Benjamin

Prudential Investments has become the latest asset manager to jump on the lower-fees bandwagon, which is gaining momentum stemming from the release of the Department of Labor's new fiduciary rule last spring.

Prudential announced fee cuts for nine mutual funds, including eight income-oriented strategies and a long-short equity fund. The fee cuts range from 5 to 34 basis points, and became effective on Monday.

The announcement follows a string of ETF fee cuts by Fidelity Investments, Charles Schwab & Co., and BlackRock Inc.

The $18.8 billion Prudential Total Return Bond Fund (PTRQX) had share classes A, B, C, R and Z cut by 7 basis points, while the Q share was cut by 3 basis points to a net operating expense of 43 basis points for all share classes.

On the other end of the lineup, the $25 million Prudential US Real Estate Fund (PJEZX) had all share classes cut by 34 basis points, down to 1.01%.

The other funds included in the fee cuts:

The $598 million Prudential Global Total Return (PGTQX).

The $335 million Prudential Floating Rate Income (PFRIX).

The $174 million Prudential Core Bond (TPCQX).

The $32 million Prudential Emerging Markets Debt Local Currency Fund (EMDQX).

The $26 million Prudential Corporate Bond (PCWQX).

The $5.9 million Prudential Select Real Estate Fund (SREQX).

The $292 million Prudential QMA Long-Short Equity Fund (PLHZX).

According to a Prudential statement, over the past five years the company has passed “along $30.2 million in savings to investors.”

“Our ongoing evaluation of expenses underscores our commitment to delivering performance and value to shareholders,” said Prudential Investments president Stuart Parker, in a prepared statement.

Todd Rosenbluth, director of mutual fund and ETF research at CFRA, said he expects the trend of lower fees to continue across the asset management industry.

(Related read: Fidelity takes on Vanguard by cutting prices)

“While investors should look beyond the costs of a mutual fund, low costs help to improve a fund's relative performance record, and as such we think advisers will continue to focus on low-cost choices," Mr. Rosenbluth said. “We expect many more asset managers will need to bring costs down in the hopes of keeping, let alone gaining, market share.”

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