Help with 457 fund picks

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Topic Author
JaySayms
Posts: 261
Joined: Mon Feb 09, 2015 5:59 pm

Help with 457 fund picks

Post by JaySayms »

In true boglehead fashion, I am trying to mimic TSM as best as possible given the funds available. For my 457 I have chosen a 70:30 stock:bond split which gives me an overall 80:20 asset allocation across my entire portfolio while keeping my bond holdings in tax sheltered investment vehicles such as the 457. All returns below are net. I struggle with figuring out how to evaluate these options....I am tempted to simply pick the funds that have the lowest expense ratios and as closely as possible mimic the TSM. Can you guys/gals give me some tips on how to best evaluate these options? How much does overall rating play? Since returns are net, does that change how much weight I put into the expense? What would you pick? Critique of what I have selected for myself?

Thanks!!!

So far, this is what I have picked:

70% stocks/ 30% bonds

Stocks:
42.5% SSgA S&P 500 Index SVSPX
3.75% JPMorgan Mid Cap Value Instl FLMVX
3.75% Baron Small Cap Instl BSFIX

20% American Funds EuroPacific Gr R6 RERGX

Bonds:
15% PIMCO Total Return Instl PTTRX
5% American Beacon SiM High Yld Opps Instl SHOIX
10% Key Guaranteed Portfolio Fund Fixed N/A

----------------------------------------------------------------------------
Available Investment Options:


Investment Option Gross/Net Ratio1 YTD 1yr 3yr 5yr 10yr/incep2 Ticker Overall rating (1-5)

Conservative Profile 0.83 / 0.83 5.03 5.03 7.30 6.36 5.36 N/A
Moderately Conservative Profile 0.90 / 0.90 5.78 5.78 9.50 7.65 6.06 N/A
Moderate Profile 0.98 / 0.98 6.46 6.46 11.65 8.96 6.52 N/A
Moderately Aggressive Profile 1.12 / 1.12 7.05 7.05 13.70 10.28 6.82 N/A
Aggressive Profile 1.22 / 1.22 8.26 8.26 17.62 12.49 6.88 N/A

BONDS/FIXED INCOME

PIMCO Total Return Instl 0.46 / 0.46 4.69 4.69 4.26 5.14 5.99 PTTRX 5
American Beacon SiM High Yld Opps Instl 0.86 / 0.84 4.25 4.25 10.65 N/A 7.93 SHOIX 5
Key Guaranteed Portfolio Fund Fixed N/A / N/A N/A N/A N/A N/A N/A N/A N/A


INTERNATIONAL:

American Funds EuroPacific Gr R6 0.49 / 0.49 -2.29 -2.29 12.12 6.05 6.92 RERGX 3


LARGE CAP:

JHancock Disciplined Value R6 0.74 / 0.71 11.04 11.04 21.94 15.54 9.20 JDVWX 4
MainStay Large Cap Growth I 0.77 / 0.77 10.54 10.54 19.67 14.62 9.35 MLAIX 3
SSgA S&P 500 Index 0.16 / 0.16 13.50 13.50 20.28 15.30 7.53 SVSPX 4

MID CAP:

JPMorgan Mid Cap Value Instl 0.93 / 0.76 15.14 15.14 22.34 18.26 10.01 FLMVX 5
Victory Munder Mid Cap Core Growth Y 1.16 / 1.13 10.17 10.17 19.56 16.30 9.35 MGOYX 4

SMALL CAP:
Baron Small Cap Instl 1.04 / 1.04 1.95 1.95 18.54 15.25 8.34 BSFIX 3
RS Partners A 1.51 / 1.45 -3.85 -3.85 17.73 14.05 7.38 RSPFX 2
User avatar
hoppy08520
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Joined: Sat Feb 18, 2012 10:36 am

Re: Help with 457 fund picks

Post by hoppy08520 »

It's not uncommon for an employer plan to have one good index fund and the rest expensive actively managed funds. That looks like your 457. Can you use just the S&P 500 index fund and then other accounts (IRA, taxable, etc.) for funds in other asset classes?

What is the interest on the "Key Guaranteed Portfolio Fund" stable value fund?
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Help with 457 fund picks

Post by Duckie »

JaySayms wrote:What would you pick?
If this were my only retirement account I would pick:
  • 50% SSgA S&P 500 Index Fund (0.16%)
    20% American Funds EuroPacific Growth R6 Class (0.49%)
    30% PIMCO Total Return Fund Institutional Class (0.46%)
The mid/small cap options and other bond option are too expensive. The only question is what is the "Key Guaranteed Portfolio Fund" paying? If more than 3% that would be a possibility.
Topic Author
JaySayms
Posts: 261
Joined: Mon Feb 09, 2015 5:59 pm

Re: Help with 457 fund picks

Post by JaySayms »

hoppy08520 wrote:It's not uncommon for an employer plan to have one good index fund and the rest expensive actively managed funds. That looks like your 457. Can you use just the S&P 500 index fund and then other accounts (IRA, taxable, etc.) for funds in other asset classes?

What is the interest on the "Key Guaranteed Portfolio Fund" stable value fund?
Why didn't I think of that! I do have a ROTH ira I could stash bond holdings into and a taxable for the international stock holdings.

Cheers!
User avatar
hoppy08520
Posts: 2193
Joined: Sat Feb 18, 2012 10:36 am

Re: Help with 457 fund picks

Post by hoppy08520 »

JaySayms wrote:
hoppy08520 wrote:It's not uncommon for an employer plan to have one good index fund and the rest expensive actively managed funds. That looks like your 457. Can you use just the S&P 500 index fund and then other accounts (IRA, taxable, etc.) for funds in other asset classes?

What is the interest on the "Key Guaranteed Portfolio Fund" stable value fund?
Why didn't I think of that! I do have a ROTH ira I could stash bond holdings into and a taxable for the international stock holdings.

Cheers!
Jay, good luck. Here's a wiki page that has some practical tips on this scenario:

How to build a lazy portfolio - Bogleheads

Also, the bond and international funds in your 457 aren't that bad -- they have an ER that is "only" ~0.3% more than the S&P 500 index fund, but the mid/small caps funds are quite a bit more expensive (which might be why Duckie's proposal left them out entirely, not to mention the fact that adding those two funds increases the complexity of your portfolio). So, if your 457 is too "big" and your IRA and taxable accounts are too "small" to hold bonds and international, don't sweat the fact that you might need to hold some international and bonds in the 457 to achieve your overall portfolio-wide AA.

Also, be aware that making changes to funds in the taxable account could create taxable events if you need to sell funds to rearrange your portfolio, so be aware of what changes you're making and the effects they could have.
Topic Author
JaySayms
Posts: 261
Joined: Mon Feb 09, 2015 5:59 pm

Re: Help with 457 fund picks

Post by JaySayms »

hoppy08520 wrote:It's not uncommon for an employer plan to have one good index fund and the rest expensive actively managed funds. That looks like your 457. Can you use just the S&P 500 index fund and then other accounts (IRA, taxable, etc.) for funds in other asset classes?
So, I've looked at the "approximating total stock market" page and as everyone here knows, there are several fund alternatives to use as an addition to the S&P 500, in order to "replicate" the TSM.
How do I tell which one is right for me? The additional fund will go in my taxable account, the S&P 500 in my 457. The ER on these funds are all roughly the same (within .02) for the admiral shares.

Options are:

80% Vanguard 500 Index Fund (VFINX) (0.15%)
20% Vanguard Extended Market Index Fund (VEXMX) (0.24%)


81% Vanguard 500 Index Fund (VFINX) (0.15%)
6% Vanguard Mid-Cap Index Fund (VIMSX) (0.21%)
13% Vanguard Small-Cap Index Fund (NAESX) (0.22%)

83% Vanguard 500 Index Fund (VFINX) (0.15%)
17% Vanguard Small-Cap Index Fund (NAESX) (0.22%)


85% Vanguard 500 Index Fund (VFINX) (0.15%)
15% Vanguard Tax-Managed Small-Cap Fund Inv (VTMSX) (0.13%)
HurdyGurdy
Posts: 1177
Joined: Wed May 09, 2012 10:21 pm

Re: Help with 457 fund picks

Post by HurdyGurdy »

IMHO Vanguard Extended Market Index Fund would be the best option.
http://www.bogleheads.org/wiki/Extended ... index_fund
Topic Author
JaySayms
Posts: 261
Joined: Mon Feb 09, 2015 5:59 pm

Re: Help with 457 fund picks

Post by JaySayms »

HurdyGurdy wrote:IMHO Vanguard Extended Market Index Fund would be the best option.
http://www.bogleheads.org/wiki/Extended ... index_fund

Thanks for the link!
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