Charles Schwab Stops Purchases of Load Mutual Funds

The company said the move was not triggered by the DOL’s new fiduciary rule.

As of May 2, Charles Schwab clients will no longer be able to purchase Class A Load mutual funds.

The company said clients can still transfer in, custody, sell and elect dividend reinvestment for these shares. 

“The move away from load funds has been a secular trend over the last decade or more and Schwab has never been a significant player in this space,” the company said in a statement to PLANADVISER. Contrary to news reports that suggest otherwise, Schwab said its decision wasn’t triggered by the Department of Labor’s (DOL’s) new fiduciary rule. “It’s a housekeeping move for a low-volume business that no longer makes sense for us to administer given the breadth of our core mutual fund offer and the reality that many firms now make their funds available directly to retail clients on a load-waived basis.”

The company also noted, “Load funds have never been part of our core offer—over the past two years we’ve accommodated about 750 of these purchase trades, a tiny fraction of our mutual fund business overall.”