Complicate portfolio in the search of lower fees?

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jlg
Posts: 71
Joined: Fri Apr 22, 2011 7:45 am

Complicate portfolio in the search of lower fees?

Post by jlg »

Hi Folks,

My company just announced that our 401k is moving its existing high cost Fido target date funds to low cost (.11ER) Vanguard Target Date Retirement Trusts. These are commingled funds, not mutual funds - thus their price can't be tracked by a ticker symbol. These are the funds (TSM, TISM, TBM, TIBM) and percentages that each trust holds:

https://institutional.vanguard.com/VGAp ... undId=1471

Now, if someone already invests in the Fido target date funds, then this is a great deal! They are also adding a $15 per quarter fee. For those not holding the target dates (or some other actively managed funds which were replaced with lower cost Vanguard actively managed funds), it means our fees are going up. Albeit by not all that much if you account has a high balance.

I currently hold this in my 401k:

Code: Select all

PIMCO Total Return Fund Institutional Class 	PTTRX  (ER 0.46)	 50.36%
Fidelity Spartan 500 Index Fund Institutional Class	FXSIX	 (ER 0.04)  32.57%
Vanguard International Value Fund Investor Shares	VTRIX (ER 0.41) 17.07%
All new money ends up going to Pimco, because of taxable contributions. Pimco and VTRIX have always been a little expensive, but represent the best of the rest. I've mostly used them for rebalancing and have been selling the equities over time as my taxable accounts have increased. My IRAs hold mostly bonds and REITs.

Would it be worth buying one of these target date trusts, with the idea of using it as a way to hold TBM? I don't really care about Total International Bond Market Index. It seems I could use of these funds (maybe 2010 or Income) and then hold additional of the above funds as needed and rebalance as needed. The BIG downside is that tracking these commingled funds without tickers will be a pain. I do everything by spreadsheet. Having my 529 (which is small) without symbols is fine. Having one of my largest accounts/holdings without a symbol will suck.

Any folks have any experience working with these types of investments?
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roymeo
Posts: 1278
Joined: Sat Apr 28, 2007 7:19 pm
Location: Oakland, CA
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Re: Complicate portfolio in the search of lower fees?

Post by roymeo »

(I'm trying to provide insight here, not tell you what a horrible person you are.)

You may not be getting much of a response here, because the subject doesn't seem to match the content, and a lot of the content doesn't seem relevant to any questions you may have. (You first mention a Fidelity and Vanguard Target Date account switch but this doesn't seem to impact you at all or have much to do with any questions you have...)

Sure, many people with TIAA-CREF accounts, Gov't savings accounts, etc. face the challenge of tracking their results very precisely when there's no exacting numbers to pull down. You could have the same class of problem if you generally split up International into regions and your work account only has a International fund. You may just guessitimate what each item's % of the full fund is and go with that--if your overall account balance is small and things get out of whack quickly, you're probably over analyzing it. If it's large enough that additional adjustment accounts are needed, it should take quite a while to walk out of adjustment, so you don't need to analyze and recalculate every month (or week, or 2-3 days).

It's also sorta hard to give you much solid advice on approach because you've shown us what your current accounts are, mentioned SOME of the new accounts but not all.

I'd say the best approach would be the same approach I'd recommend to a new person to the board. Though you probably have several of these 'steps' already covered, stepping back and taking them in step may help, especially since your options are changing:
1. Determine your Asset Allocation, starting with Stock/Bond, then US/Intl, and/or any other subdivisions you find necessary.
2. Determine an ideal set of funds from your various options that would meet that goal. Iterate to take in tax implications, reasonable expectations of account values and limits, covering for crappy fund choices (or in your case, opaque fund choices).
3. Invest new money and move current money as appropriate to try to bend what you have to the goals.

I think you have #1, but since your company is "moving your cheese" on #3, I think you may want to step back and re-examine step #2...and maybe that's what you're doing by asking here...but you aren't sharing what your AA plan is nor what other useful funds you now have in your biggest basket.

Hope that helps & bumps you up so you get more (useful) feedback.

roymeo
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo
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