What is this in my 401k history

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What is this in my 401k history

Postby mojave » Fri Feb 08, 2013 12:34 pm

I was just looking through my 401k history since its inception and I noticed something bizarre and need it explained to me becuase I'm not quite sure what happened here and couldn't find much info online regarding the fund. Originally the fund was called "Fidelity Freedom 2050" and then changed to "Fidelity Freedom K 2050". Not sure what the K means. But I'm guessing that's why my total amount was transferred out and then back in (to the new fund). All of the below happened on 4/18/11, I've included a contribution from 4/5/11 to show you how much I was putting in at the time.

Amount Shares/Unit
Exchange In 10,594.57 763.298
CONTRIBUTION 162.32 11.694
Exchange Out -10,594.57 -1,131.90
Change In Market Value 769.87 0
CONTRIBUTION 157.59 16.712

That change in market value is insane, everywhere else in my history the change in market value is around 3 cents. I'm not complaining but what's going on here? I debated asking because I'm sure this is kind of a "duh" to most.
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Re: What is this in my 401k history

Postby mojave » Fri Feb 08, 2013 12:40 pm

Sorry that's so hard to read, I added space and aligned everything but it didn't stay that way...
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Re: What is this in my 401k history

Postby nothlit » Fri Feb 08, 2013 1:28 pm

Fidelity's class K shares were introduced a few years ago as a lower-expense option for certain investors (typically, institutional 401k plans). It sounds like your 401k plan qualified, so your shares were automatically converted.

You may also want to see if your 401k also offers Fidelity Freedom Index 2050 (FIPFX). It is an index fund, while Fidelity Freedom K 2050 (FFKHX) is not. The index version is likely to have a much lower expense ratio.
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Re: What is this in my 401k history

Postby Default User BR » Sat Feb 09, 2013 10:48 am

mojave wrote:Sorry that's so hard to read, I added space and aligned everything but it didn't stay that way...

If you want to do that, wrap everything in code tags. And use preview.


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Re: What is this in my 401k history

Postby livesoft » Sat Feb 09, 2013 11:13 am

mojave wrote:That change in market value is insane, everywhere else in my history the change in market value is around 3 cents. I'm not complaining but what's going on here? I debated asking because I'm sure this is kind of a "duh" to most.

The "change in market value" are the unrealized gains you had in the fund above your cost basis at the time of the exchange.

Your 401(k) provider must have provided an e-mail or letter that your plan was switching from the standard Freedom funds to the Freedom K funds. It would be very unusual for this to not be announced ahead of time. I'd check that such e-mail don't go into your junk/spam folder.
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: What is this in my 401k history

Postby RobInCT » Sat Feb 09, 2013 11:36 am

Saved you about .13% yearly. Unfortunately your expense ratio is still a pretty mediocre .64%. Fidelity lifecycle funds are a ripoff IMO. They cost almost 4 times what the equivalent Vanguard fund would cost. I owned this fund, and the same thing happened to me. I have since switched to other funds (buying stocks and bonds separately) to find lower expense ratios.
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Re: What is this in my 401k history

Postby skylar » Sat Feb 09, 2013 1:33 pm

RobInCT wrote:Saved you about .13% yearly. Unfortunately your expense ratio is still a pretty mediocre .64%. Fidelity lifecycle funds are a ripoff IMO. They cost almost 4 times what the equivalent Vanguard fund would cost. I owned this fund, and the same thing happened to me. I have since switched to other funds (buying stocks and bonds separately) to find lower expense ratios.


Not only is the expense ratio quite high, but it seems like the underlying funds were chosen without any real thought about how they would benefit an overall portfolio. It seems like Fidelity just threw some stuff at the wall and kept whatever stuck. The Fidelity Freedom 2050 fund has 25 underlying funds - how can one say what overlap there is between the funds? In contract, Vanguard's TR2050 fund has three underlying funds, and it's easy to see there is little to no overlap and is well-diversified.

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