AIM Blue Chip Plans 3-for-1 Share Split

Large-cap (ABCAX)AIM Blue Chip will split its shares 3 for 1 on Sept. 8, AIM Funds announced Tuesday.

That means the broker-sold fund's shareholders will get three shares for every one they own on that day. The move, which isn't a taxable event, won't increase or reduce the value of shareholders' investment because each share's value will be reduced accordingly.

Although some investors might shy away from a fund with a high share price -- the $6.3 billion fund's Class A shares closed at $55.23 on Monday -- a fund's share price is neither inherently positive nor negative for a fund. A fund's price is based on the underlying value of the stocks in the fund's portfolio. So, no matter what a fund's share price, a dollar invested will get the same return.

While some in the industry would agree that a high share price or net asset value can discourage investors, it's a tough case to make. The $105.6 billion (VFINX)Vanguard 500 Index fund, the largest fund in the nation, had a $136.67 share price as of Monday's close.

Houston-based AIM isn't a stranger to splits, which it calls "stock dividends" in news releases. The firm's small-cap (AAGFX)Aggressive Growth fund just executed a 3-for-1 split on July 14.

Although splits for shares of a company's stock don't have any bearing on a company's actual value either, the argument for stock-share splits is better: Since stocks often have to be bought in round lots, reducing a stock's share price makes it more accessible to modest investors. But this argument doesn't work for funds, where investors buy dollar amounts, not blocks of shares.

See this Dear Dagen column, "With Mutual Funds, Splitting Shares is Splitting Hairs," for more on share splits.

See Tuesday's earlier Fund Moves, Manager Changes.

See Monday's Fund Moves, Manager Changes.

>To order reprints of this article, click here: Reprints