Morningstar notes that unbundled and semi-bundled share classes are not necessarily the best choice for every investor. Bundled share classes may work best for sophisticated investors who wish to pay upfront commissions because advice associated with these share classes may come at a lower cost.
Though unbundled share classes may remove some of the potential conflicts of interest between investors, advisors and fund managers, they may carry greater costs to the end investor than semi-bundled or bundled share classes.
“Even though there’s no DOL rule, we still see a market and a use for these unbundled and semi-bundled share classes, “ said Mitchell. “Before the rule, there was already a movement away from traditional bundled share classes, and there’s some inertia still behind it.”