Retail shares VS Institutional shares

Derf

Last Quarter 401-k traded in retail for institutional shares. I ran the institutional shares, prvix, adjusted close & came out + 5.31% gain for the Qter.. 401-k shows gain of 3.19 %. The other change took place in rptix. Adjusted close shows +1.37 % while 401-k shows -.38 % for the Qter.. Was this due to selling one day at close & buying the next day at close.
Did I take one in the shorts or what. Seems to me MF would do the exchange same day to keep the customer happy !

Thoughts requested,
Derf

msf

According to M*, PRVIX return for Q1 2016 was 3.19%, right on the nose.
http://performance.morningstar.com/fund/performance-return.action?t=PRVIX&region=usa&culture=en_US

Likewise, RPTIX for Q1 2016 was -0.38%, again matching what your 401k said.
http://performance.morningstar.com/fund/performance-return.action?t=RPTIX&region=usa&culture=en_US

As a sanity check, I went to TRP's site to get the T. Rowe Price Report for Spring 2016. It shows the retail class of Small Cap Value (PRSVX) returned 3.17% in the quarter, just two basis points behind PRVIX.

Derf

@msf: Thanks for the sanity check ! I used adjusted close at Yahoo instead of performance. 401-k checks out now.
Derf

Sven

From year to year, the difference is small between institutional and retail shares as msf pointed out with T. Rowe Price funds. The compounded returns say a 10 or 20 year period is much larger. If the retail shares carry 12-b-1 and other expense, the difference is even more meaningful.

The only barrier to small investors outside of their tax deferred accounts is the large minimum investment, many (but not all) require a $1M even through discount brokerages.

msf

Sometimes you can do a distribution in kind from your IRA to your taxable account and bootstrap an institutional share account that way. (Occasionally the fund company will require you to pony up enough to meet the high minimum or it will convert the shares to retail shares.)

If you do a distribution this way, you can even avoid IRA tax consequences by replacing the shares removed with their cash value within 60 days (i.e. a 60 day IRA rollover).

I've posted before that I think the question of whether there's a 12b-1 fee is a red herring.

Retail funds are going to collect money from the fund one way or another to pay for servicing the account. A fund uses this money to pay a third party brokerage to do the selling and generate account statements, or to do these tasks itself if selling direct.

It may or may not break the cost out as a separate line item, but either way, that's a reason why the retail funds cost more. The TRP fund has no 12b-1 fee, but included in "other expenses" are "administrative fees" of up to 0.15%:

The funds may make payments to retirement plan recordkeepers, broker-dealers, and other financial intermediaries (at a rate of up to 0.15% of average daily net assets per year) for transfer agency, recordkeeping, and other administrative services that they provide on behalf of the funds. These administrative services may include services such as maintaining account records for each customer; transmitting net purchase and redemption orders; delivering shareholder confirmations, statements, and tax forms; and providing support to respond to customers’ questions regarding their accounts.

See Prospectus.