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Dodge and Cox announces forward splits to several funds
I have no vested interest here but I still wonder why mutual funds split. Does the fund company expect to increase AUM because share prices are now going to be lower thereby attracting more investors? I can see that with a single stock (equity) but not with a 'fund' where a share is a mix of all the individual holdings.
For ETFs, I can understand reverse-splits to avoid delisting (need > $1) or attract institutional interest (need > $5). But that isn't applicable to OEFs.
D&C is one of the oldest mutual fund firms. DODBX opened in 1931 and has a NAV over $111. That doesn’t explain the split except there might be a psychological reason pertaining to public perception of value or a technical reason related to ease of buying / trading in wanting to chop down that high share price.
Unnecessary? Yes. Useless? No, at least not according to D&C that offers this explanation:
Why is Dodge & Cox conducting a share split? New mutual funds generally launch with an initial NAV of $10.00 per share. Given their earlier inception dates and asset classes, the NAVs of the Balanced Fund, International Stock Fund, and Stock Fund have grown considerably. We believe the share splits will better align these Funds’ NAVs with the other Dodge & Cox Funds’ NAVs.
I prefer share prices that are not very high, so that any purchase or sale is accurate to within a penny. Suppose I want to buy $1.01 of a fund. If the share price is $100.00, I will wind up with 0.010 shares (0.0101 shares rounded to three decimal places) worth just $1.00. I've lost a penny. But if the share price is $10, then I will wind up with 0.101 shares, worth exactly $1.01. A penny saved is a penny earned.
And as the owner of a VW GTI, my favorite has to be:
"To my other friends and relatives who also never learned the value of a dollar, I leave a dollar. Finally, to my nephew Harold who oft time said, "a penny saved is a penny earned" and who also oft time said, "Gee Uncle Max it sure pays to own a Volkswagen, I leave my entire fortune ..."
OTOH, which sounds better: my fund went up a buck today ($1 on $100/share), or I made a dime (10¢ on $10/share)? If we're talking appearances, it looks like easy money if the share price is high.
Do people here even look at the share price of an OEF when buying or selling the fund?
While I do have an interest in each of the three funds identified, I do find it more attractive to purchase shares at $15 or $18 per share rather than $278 of $156 per share.
A similar tendency is used by investors to buy shares in a company after a stock split. Some of the same arguments stated could also apply to stocks such as Bookings and Autozone.
Many brokerage trade confirmations now show prices with more than 2 decimals. One day, trade entry screens may also show more digits. Some VAs display prices with 4 decimals - CREF Stock/QCSTIX $1,76.9360 (TIAA website, but not at Yahoo Finance). But those display issues can be addressed in future.
Can SEQUX be far behind? It's up to 215~. SMH is up to 315.~
I have been watching DODGX. At a certain point I can see where the share price becomes daunting for new buyers. Just 8.9928 shares for forking across the minimum doesn't seem fun to me.
I think it's interesting that they wanted the share prices to look similar to their newer funds. Perhaps it will make for more eye-pleasing reports.
Clearbridge Variable Small Cap Growth Portfolio 75.521712 72.637799 69.259806 67.165795 63.638324
Columbia Variable Portfolio - Acorn Fund 138.460819 134.783557 130.140467 125.233172 120.413181
[etc.]
Current values as of 09/19/2025
Note: Unit values are shown to 6 decimal places.
Exchange trades can be executed in hundredths of a penny. I recently bought an ETF at a price of $XX.XX46. That's the way it displays on all the paper communications (confirmations and statements) though online typically only pennies (2 decimal places) are displayed.
But VAs and ETFs (and stocks) are not relevant here. The D&C funds are OEFs.
NAVs of OEFs are almost rounded to two decimal places. That's what makes large share prices slightly problematic, and why reducing the NAV reduces rounding errors on transactions.
Yea, I've had share price scare me away many times even if it makes no sense. It is just the feel. It feels like getting 10 t-shirts for $100 each instead of 200 t-shirts at $5 each (which "feels" like a fuller closet). Of course, the analogy is very bad without the feels like part since growth is harder in a full closet but not in a high share cost fund (or rather shouldn't be). Should it?
Sequoia a whole 'nuther beast. While all OEFs can redeem in kind, Sequoia actually does this. As they wrote to the WSJ in 2016:
For many years Sequoia Fund has clearly disclosed that we can and do pay large redemptions with securities rather than cash ...
We redeem with shares to benefit our continuing shareholders, who might otherwise pay capital-gains taxes on the sale of appreciated stock that might be required for redemptions. By redeeming in kind, our 20,000 continuing Sequoia shareholders will pay lower capital-gains taxes in the future. Our goal is always to be tax-efficient and to do what is right for continuing shareholders. For a departing shareholder, there is no tax or other consequence to receiving stock instead of cash, aside from the minor inconvenience of having to sell a security upon receipt. We take care to always deliver stocks that trade in sufficient volume so that the exiting shareholder can sell them immediately without depressing the market for a particular security.
Sequoia a whole 'nuther beast. While all OEFs can redeem in kind, Sequoia actually does this. As they wrote to the WSJ in 2016:
For many years Sequoia Fund has clearly disclosed that we can and do pay large redemptions with securities rather than cash ...
We redeem with shares to benefit our continuing shareholders, who might otherwise pay capital-gains taxes on the sale of appreciated stock that might be required for redemptions. By redeeming in kind, our 20,000 continuing Sequoia shareholders will pay lower capital-gains taxes in the future. Our goal is always to be tax-efficient and to do what is right for continuing shareholders. For a departing shareholder, there is no tax or other consequence to receiving stock instead of cash, aside from the minor inconvenience of having to sell a security upon receipt. We take care to always deliver stocks that trade in sufficient volume so that the exiting shareholder can sell them immediately without depressing the market for a particular security.
Yea, I've had share price scare me away many times even if it makes no sense. It is just the feel. It feels like getting 10 t-shirts for $100 each instead of 200 t-shirts at $5 each (which "feels" like a fuller closet). Of course, the analogy is very bad without the feels like part since growth is harder in a full closet but not in a high share cost fund (or rather shouldn't be). Should it?
Same. I always feel better buying 'cheaper' shares of stocks....it's a stupid human psychology thing.
"NAVs of OEFs are almost rounded to two decimal places. That's what makes large share prices slightly problematic, and why reducing the NAV reduces rounding errors on transactions."
In my Schwab accounts Crossing Bridge's Strategic Income fund is priced out to four decimal points. Frankly I find it kind of annoying.
$8.7785 (as of Sept 19) for RSIIX. Interesting. Thanks.
I've not seen that before and CrossingBridge only quotes its fund price to the penny. It looks like Schwab shows four decimal places for other CrossingBridge funds as well, e.g. CBLDX.
I wonder if you'd get a slightly different number of shares if you purchased at, say, Fidelity (quoted to two decimal places) and at Schwab. Would $877.85 get you exactly 100 shares at Schwab but only 99.983 shares at Fidelity (@$8.78/share)?
Comments
For ETFs, I can understand reverse-splits to avoid delisting (need > $1) or attract institutional interest (need > $5). But that isn't applicable to OEFs.
I'm still pinching pennies, at least until the Treasury does away with them.
A more modern formulation might be: A dollar saved is a quarter earned.
And as the owner of a VW GTI, my favorite has to be:
"To my other friends and relatives who also never learned the value of a dollar, I leave a dollar. Finally, to my nephew Harold who oft time said, "a penny saved is a penny earned" and who also oft time said, "Gee Uncle Max it sure pays to own a Volkswagen, I leave my entire fortune ..."
Do people here even look at the share price of an OEF when buying or selling the fund?
A similar tendency is used by investors to buy shares in a company after a stock split. Some of the same arguments stated could also apply to stocks such as Bookings and Autozone.
But those display issues can be addressed in future.
I have been watching DODGX. At a certain point I can see where the share price becomes daunting for new buyers. Just 8.9928 shares for forking across the minimum doesn't seem fun to me.
I think it's interesting that they wanted the share prices to look similar to their newer funds. Perhaps it will make for more eye-pleasing reports.
Some VAs (e.g. TIAA) even display prices with six decimals: Exchange trades can be executed in hundredths of a penny. I recently bought an ETF at a price of $XX.XX46. That's the way it displays on all the paper communications (confirmations and statements) though online typically only pennies (2 decimal places) are displayed.
But VAs and ETFs (and stocks) are not relevant here. The D&C funds are OEFs.
NAVs of OEFs are almost rounded to two decimal places. That's what makes large share prices slightly problematic, and why reducing the NAV reduces rounding errors on transactions.
There is one exception that I know of to the two decimal place reporting of OEF NAVs. Floating rate MMFs report NAVs to four decimal places. See, e.g. POIXX
https://www.federatedhermes.com/us/products/mutual-funds/instl-prime-obligations/is.do https://www.ici.org/ops_mmf_reform/fourdecimal
TSP also quotes to four decimal places, but are those OEFs?
Sequoia a whole 'nuther beast. While all OEFs can redeem in kind, Sequoia actually does this. As they wrote to the WSJ in 2016: https://www.wsj.com/articles/sequoias-redemption-with-securities-is-tax-efficient-1460583731
Maybe it will become an issue for my heirs, but I doubt it.
"NAVs of OEFs are almost rounded to two decimal places. That's what makes large share prices slightly problematic, and why reducing the NAV reduces rounding errors on transactions."
In my Schwab accounts Crossing Bridge's Strategic Income fund is priced out to four decimal points. Frankly I find it kind of annoying.
I've not seen that before and CrossingBridge only quotes its fund price to the penny. It looks like Schwab shows four decimal places for other CrossingBridge funds as well, e.g. CBLDX.
I wonder if you'd get a slightly different number of shares if you purchased at, say, Fidelity (quoted to two decimal places) and at Schwab. Would $877.85 get you exactly 100 shares at Schwab but only 99.983 shares at Fidelity (@$8.78/share)?
Here are the Schwab pages for RSIIX and CBLDX:
https://www.schwab.com/research/mutual-funds/quotes/summary/rsiix
https://www.schwab.com/research/mutual-funds/quotes/summary/cbldx