I regret the time you spent compiling the expense ratios of all of these funds, as instructed by another poster above. If these are the only funds available in your employer plan, and no fund family other than Price is offered, then the expense ratios essentially become irrelevant, because you have a black-and-white decision--regardless of individual fund expense ratios--between using the plan and not using it at all. If your employer contributes matching funds to the plan, then--although IMO this fund lineup is certainly nowhere near ideal--I definitely think you should contribute to the plan rather than pass by the "free" employer money.
Similarly, if you are going to use this plan, then the same poster's advice to use index funds was also not helpful in this case. There is only one index funds on that list. Even if this plan offered you access to the entire TRP fund lineup--which it doesn't--your index options would still be extremely limited, as Price has skimpy offerings for indexing: on the domestic side, a U.S. total stock market index, an S&P 500 index, and an Extended Market index [the rest of U.S. stocks "after" the S&P 500]. On the foreign side, an International Equity Index of large company stocks in developed markets. And on the fixed income side, an "Enhanced" bond market index, meaning that there's a small amount of active management going on in the selection of securities. And that's it for T. Rowe Price index funds--with only the 500 index available in your plan.
If you have indeed listed the entire fund lineup available to you, then I think it's a strange lineup indeed, in particular because, other than Prime money market and Spectrum Income they've given you no other way to get access to bonds except for those offered within the Retirement series of funds.
A few comments:
Spectrum Income is a slightly strange bird and, notwithstanding its name, not even a fund entirely composed of bonds. About 15% of the fund is typically in the Equity Income Fund, large dividend paying U.S. stocks--although in my observation this Equity Income Fund doesn't necessarily limit itself to stocks with generous dividend payouts but, rather, more generally uses value stocks. The Equity Income Fund is already available to you separately in your plan. Spectrum Income also typically contains a substantial dash of junk ("high yield") bonds, so you would have to decide if that bothers you.
Spectrum Growth is a fine fund-of-funds, typically about 70% U.S. stocks and 30% foreign. Looking at the fund list in the rest of your plan's lineup, you would get a substantial amount of Equity Income, Blue Chip Growth, and International Stock within Spectrum Growth (i.e., there would be little point in using those funds separately if you used Spectrum Growth) as well as small amounts of New Horizons, Small-Cap Value, and Mid-Cap Growth.
International Discovery is an excellent foreign small/mid-cap fund, although like many T. Rowe Price funds, leans markedly toward growth stocks. The current manager has been in place since the late 1990s and is therefore one of the longest-serving managers in this fund category. While T. Rowe Price offers a range of small and mid-cap funds on the domestic side, with either growth or value leanings, International Discovery is the only TRP fund for non-large international stocks.
Since you give no information on your specific goals or desired allocation, it's difficult to say more. You could actually fashion a decent allocation simply by using Spectrum Growth and Spectrum Income in some proportion to one another, provided you like the U.S./foreign mix of the former and don't mind the dash of junk bonds in the latter (which, because it includes Equity Income, will also add a bit more to your U.S. holdings). Or, for another type of bond exposure, you could use Retirement Income, the most conservative (and fixed-allocation) of the Retirement funds, and then add some other stand-alone stock funds to it, keeping in mind, however, that Retirement Income itself is already about 40% stocks.
Or, if one of the other Retirement series funds approximates your desired allocation--ignore the year numbers in the fund names and look at the actual allocations themselves--you could just go for simplicity and use that one fund alone.
T. Rowe Price has a full lineup of bond funds: intermediate and long-term Treasury (but not short-term), GNMA, TIPS, international bonds, several corporate bond funds in various maturity types. Their absence from your plan is puzzling and imposes some odd choices for the participants.
Last edited by beardsworth
on Fri Apr 19, 2013 8:31 am, edited 2 times in total.