Cutting dating expenses
The new underlying funds use the firm's blended research strategy, which combines fundamental and quantitative analysis.
When a portion of each fund's exposure was reallocated to the blended funds from existing fundamental equity funds, fees were reduced by 3 basis points to 8 basis points by vintage year, MFS spokesman Daniel Flaherty said in an email.
This adjusting entry will credit Accrued Liabilities and will debit the appropriate expense or other account for the amounts that were incurred but are not yet included in Accounts Payable.
The balance in Accrued Liabilities will be reported in the current liability section of the balance sheet immediately after Accounts Payable.
Five months after the direct management fee model was put in place for American Century's One Choice Target-Date Portfolios, the firm was able to add an emerging market corporate debt strategy at no additional cost to plan participants, Mr. Under the old fee model, changing an underlying strategy would have had a "tangible effect on the expense ratio," he added.
When the new fee model was put in place, expense ratios for most mutual fund share classes for the One Choice portfolios were reduced by 6 basis points, while the expense ratio for the R6 share class (which doesn't have revenue sharing) fell by 13 basis points, he said. Haas said the new fee structure reinforced the firm's "commitment to being competitively priced in the target-date space" and providing better retirement outcomes for participants.
It is also necessary to review the receiving reports that have not yet been matched to vendor invoices.
In 2016, MFS Investment Management lowered expenses for its Lifetime target-date series by adding several lower-cost underlying equity funds.
Note: The proper cut-off at the end of each accounting period becomes more complicated and often more significant if a company has inventories of finished products, work-in-process and raw materials.