What is a Y-Share?

Y-shares are known as the institutional share class that are provided in open-end Mutual Funds. Aiming at the institutional investors, often, this share class comes with high minimum investment.

Also, this share class provides the advantages of limited or waived load charges as well as low comparative total annual fees.

Understanding Y-Shares

Basically, Y-shares are the alternatives to I-shares that are targeted at institutional investors and offered in the most common mutual fund share class. Y-shares carry characteristics and features that are customized as per the requirements of institutions.

One of the most different characteristics of Y-shares and other institutional share classes is the high minimum investment. Usually, sales loads are not needed for Y-shares that enable institutional investors to purchase and sell shares with no extra commission charges.

Considering that Y-shares are not linked to intermediary sales charges, they usually don’t pay distribution fees from the expenses of the fund either. Without this charge, the total expense ratio goes lesser in comparison to other share classes in the fund, which is regarded as another advantage for institutional investors.

As mentioned above, Y-shares are generally reserved for institutional investors; however, they might enable investment from the investors of retirement plan in certain cases. Most of the mutual funds will have chosen retirement share classes with the same advantages to institutional shares.

Funds that are without any retirement share classes might enable pooled fund investments into Y-shares from such retirement plans that are collectively seeking fund investment. This can offer a substantial advantage to retirement shareholders who will be taking part in the savings from lower fees of the share class.

Example of Y-Shares

Operating worldwide, Putnam Investments is one of the investment managers that provide Y-shares around several of its funds as the main share class for institutional investors. One such example is the Putnam Global Equity Fund. This fund provides:

• A-shares
• B-shares
• C-shares
• M-shares
• R-shares
• R6-shares
• T-shares
• Y-shares

The Y-share class of the Putnam Global Equity Fund charges absolutely no back-end or front-end sales commissions. This way, the share class sets one of the lowest annual expense ratios in the fund. As of March 30, 2020, the performance of Y-shares was one of the highest in the last five years of the fund.