Help picking 401k funds

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Help picking 401k funds

Postby brown3218 » Wed Dec 26, 2012 1:07 am

First post here

I'm trying to see how I can best implement the three-fund portfolio in my companies 401k plan. The three funds suggested by this site are:

Vanguard Total Stock Market Index Fund (VTSMX)
Vanguard Total International Stock Index Fund (VGTSX)
Vanguard Total Bond Market Fund (VBMFX)

I initially thought I would mimic the suggested portfolio by using these three funds:
FSTVX Spartan® Total Market Index Fund - Fidelity Advantage Class (expense ratio .07)
FSIVX Spartan® International Index Fund - Fidelity Advantage Class (expense ratio .12)
FXSTX Spartan® U.S. Bond Index Fund - Institutional Class (expense ratio .07)

If I understand correctly, FSIVX doesn't really have as much exposure to emerging markets as VGTSX does. Should I do a mixture of FSIVX and FPMAX, the Spartan® Emerging Markets Index Fund - Fidelity Advantage Class (expense ratio .22)? Or do you think its sufficient to just do FSIVX by it self.

Also in regards to my bond exposure, If I understand correctly, FXSTX doesn't have any exposure to foreign bonds, unlike VBMFX. Should I instead choose FSGDX Spartan® Global ex U.S. Index Fund - Fidelity Advantage Class (expense .18)? Or should I do a combination of the two funds, or should I consider using the Fidelity Total Bond Fund, FTBFX, (expense .45)?

I appreciate the help. Thanks everyone.
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Re: Help picking 401k funds

Postby Johm221122 » Wed Dec 26, 2012 9:01 am

Welcome to forum,
If you want to add emerging market fund that is probably a good idea
I would just stick with Spartan US bond index
Good luck
john
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Re: Help picking 401k funds

Postby brown3218 » Wed Dec 26, 2012 10:29 am

Do you recommend doing the emerging markets in conjunction with the other international fund? If I want 25% international, what % of emerging should I have?
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Re: Help picking 401k funds

Postby livesoft » Wed Dec 26, 2012 10:37 am

There seems to a be a mixup in your post where you have mixed up bond funds with equity funds.

VTSMX -> FSTVX, check
VGTSX -> FSGDX (this you got misxed up!) FSGDX does have emerging markets equities along with developed market equities. These funds follow the same index.
VBMFX -> FXSTX check. VBMFX does not have foreign bonds. It is a US bond index fund just like FXSTX.

You do not need to venture away from those 3 Fidelity funds if you want the equivalent of a 3 fund Vanguard portfolio.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Help picking 401k funds

Postby peppers » Wed Dec 26, 2012 10:49 am

Total Bond Mkt Index Inv
Asset-Backed 0.3%
Commercial Mortgage-Backed 2.1%
Finance 8.0%
Foreign 5.9%
Government Mortgage-Backed 21.1%
Industrial 13.2%
Other 0.7%
Treasury/Agency 46.0%
Utilities 2.7%
Total 100.0%

VBMFX
"..the cavalry ain't comin' kid, you're on your own..."
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Re: Help picking 401k funds

Postby Johm221122 » Wed Dec 26, 2012 12:39 pm

brown3218 wrote:Do you recommend doing the emerging markets in conjunction with the other international fund? If I want 25% international, what % of emerging should I have?

If you want to add emerging market 5-10% of portfolio is fine
John
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Re: Help picking 401k funds

Postby livesoft » Wed Dec 26, 2012 1:27 pm

Just to re-iterate: If one uses FSGDX instead of FSIVX, then FSGDX already contains emerging markets and there is no need to add emerging markets.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Help picking 401k funds

Postby Duckie » Wed Dec 26, 2012 11:42 pm

brown3218, as mentioned above FSGDX Spartan Global is your best option. However, if you do want to split the funds then 75% developed markets FSIVX plus 25% emerging markets FPMAX would work. If your international allocation is 25% of the total portfolio that would mean about 19% FSIVX and 6% FPMAX. You would still be missing small-caps and Canada. You have a better choice. Some people don't.
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Re: Help picking 401k funds

Postby livesoft » Thu Dec 27, 2012 12:05 am

^ I believe FSGDX contains the market weight of Canadian stocks although as you wrote the FSIVX + FPMAX option would not have Canadian stocks.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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