Low Fee Index Funds?
Low Fee Index Funds?
Hi, brand new Boglehead forum member here, this is a very interesting Forum.
On the recent Frontline Special about 401k's Jack Bogle mentioned "Index Funds" with only a 1% fee. Listed below are some of the choices my Deferred Comp plan offers. Are any of these exactly what he was referring to?
Russell 2000 Benchmark Index
MSCI EAFE Benchmark Index
Vanguard Mid Cap Index Fund
Spliced Mid Cap Benchmark Index
Vanguard Institutional Index Fund
S&P 500 Benchmark Index
Vanguard Balanced Index Fund
Vanguard Balanced Composite Benchmark Index
Vanguard Total Bond Market Fund
Barclays Capital Aggregate Bond Benchmark Index
Also, The fee column Lists the Gross Fund EXP % and the Admin fee %. Are those percentages of the gains only, or the principal plus gains?
I have only recently taken an interest in investing and don't understand a lot of the lingo, yet. So if you could keep your answers simple for me, I would appreciate it. Thank you.
On the recent Frontline Special about 401k's Jack Bogle mentioned "Index Funds" with only a 1% fee. Listed below are some of the choices my Deferred Comp plan offers. Are any of these exactly what he was referring to?
Russell 2000 Benchmark Index
MSCI EAFE Benchmark Index
Vanguard Mid Cap Index Fund
Spliced Mid Cap Benchmark Index
Vanguard Institutional Index Fund
S&P 500 Benchmark Index
Vanguard Balanced Index Fund
Vanguard Balanced Composite Benchmark Index
Vanguard Total Bond Market Fund
Barclays Capital Aggregate Bond Benchmark Index
Also, The fee column Lists the Gross Fund EXP % and the Admin fee %. Are those percentages of the gains only, or the principal plus gains?
I have only recently taken an interest in investing and don't understand a lot of the lingo, yet. So if you could keep your answers simple for me, I would appreciate it. Thank you.
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Re: Low Fee Index Funds?
The fees are on your total amount of fund,that includes principal plus gains
Welcome to forum
John
Welcome to forum
John
Re: Low Fee Index Funds?
You can check the expense ratios for funds from the fund's website, Vanguard or whoever. The information is also available from a site like Morningstar. I think you will find that Vanguard's index funds will all have expenses at 0.2% or less. The expense percentage would be applied on the total value of the fund on an annual basis.
As a matter of understanding the question you are asking and terminology, the index does not have an expense associated with it, but, a mutual fund that tracks that index will have an expense associated with it.
As a matter of understanding the question you are asking and terminology, the index does not have an expense associated with it, but, a mutual fund that tracks that index will have an expense associated with it.
Bob
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Re: Low Fee Index Funds?
The funds listed by the OP have low expense ratios by the standards of the forum. However, these great funds could still be used in a 401(k) plan with other fees.
For example, Vanguard reports that the Vanguard Institutional Index fund has an expense ratio of 0.04%. If Vanner's fee column lists 0.04% as the gross expense ratio for this fund, then that is good. If the Admin fee % column is more than that, then something else is going on.
So Vanner what are the exact numbers reported for this fund?
For example, Vanguard reports that the Vanguard Institutional Index fund has an expense ratio of 0.04%. If Vanner's fee column lists 0.04% as the gross expense ratio for this fund, then that is good. If the Admin fee % column is more than that, then something else is going on.
So Vanner what are the exact numbers reported for this fund?
Re: Low Fee Index Funds?
My sheet states the Vanguard Institutional Index Fund has a 0.02% Gross Fund EXP and 0.05% Admin Fee.
Re: Low Fee Index Funds?
I think I listed some of the Indexes as if they were funds. Is that what I did?
Vanguard Mid Cap Index Fund
Spliced Mid Cap Benchmark Index
Vanguard Institutional Index Fund
S&P 500 Benchmark Index
Vanguard Balanced Index Fund
Vanguard Balanced Composite Benchmark Index
Vanguard Total Bond Market Fund
Barclays Capital Aggregate Bond Benchmark Index
So the italicized Indexes are just a baseline to measure the above fund against?
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Re: Low Fee Index Funds?
YesVanner wrote:
I think I listed some of the Indexes as if they were funds. Is that what I did?
Vanguard Mid Cap Index Fund
Spliced Mid Cap Benchmark Index
Vanguard Institutional Index Fund
S&P 500 Benchmark Index
Vanguard Balanced Index Fund
Vanguard Balanced Composite Benchmark Index
Vanguard Total Bond Market Fund
Barclays Capital Aggregate Bond Benchmark Index
So italicized Indexes are just a baseline to measure the above fund against?
Re: Low Fee Index Funds?
So as far as expenses go, your funds are probably best-in-class and one cannot improve on that aspect of your funds. So you can smile about the Frontline report and pretty much say, "Thank goodness that Frontline report does not apply to my situation."
Re: Low Fee Index Funds?
So as far as fees go, you are saying these Gross fund EXP's and Admin fees are relatively low?livesoft wrote:So as far as expenses go, your funds are probably best-in-class and one cannot improve on that aspect of your funds. So you can smile about the Frontline report and pretty much say, "Thank goodness that Frontline report does not apply to my situation."
. ...................................Gross Fund EXP, Admin Fee
Vanguard Mid Cap Index Fund 0.06% 0.05%
Vanguard Institutional Index Fund 0.02% 0.05%
Vanguard Balanced Index Fund 0.08% 0.05%
Vanguard Total Bond Market Fund 0.05% 0.05%
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Re: Low Fee Index Funds?
Basically, there the best you could ever hope forVanner wrote:So as far as fees go, you are saying these Gross fund EXP's and Admin fees are relatively low?livesoft wrote:So as far as expenses go, your funds are probably best-in-class and one cannot improve on that aspect of your funds. So you can smile about the Frontline report and pretty much say, "Thank goodness that Frontline report does not apply to my situation."
. ...................................Gross Fund EXP, Admin Fee
Vanguard Mid Cap Index Fund 0.06% 0.05%
Vanguard Institutional Index Fund 0.02% 0.05%
Vanguard Balanced Index Fund 0.08% 0.05%
Vanguard Total Bond Market Fund 0.05% 0.05%
John
Last edited by Johm221122 on Fri May 03, 2013 8:44 pm, edited 1 time in total.
Re: Low Fee Index Funds?
You have a great deal. Apparently, you pay an extra 0.05% administrative fee to operate the 401(k), which is added to the costs of your funds to get total expenses, but 0.05% is a very low additional cost and you have extra-low-cost institutional shares of the funds. Even with the extra fee, you pay 0.10% for Total Bond Market Index, which is the same cost available to retail Vanguard investors with $10,000 to invest. And you pay 0.07% for Institutional Index (an S&P 500 index fund); while Vanguard makes the fund available at retail for 0.05%, that's a trivial difference.Vanner wrote:So as far as fees go, you are saying these Gross fund EXP's and Admin fees are relatively low?
. ...................................Gross Fund EXP, Admin Fee
Vanguard Mid Cap Index Fund 0.06% 0.05%
Vanguard Institutional Index Fund 0.02% 0.05%
Vanguard Balanced Index Fund 0.08% 0.05%
Vanguard Total Bond Market Fund 0.05% 0.05%
The funds you listed don't include the small-cap (Russell 2000) or international (MSCI EAFE) indexes; check the expenses on those funds. If your 401(k) doesn't have a low-cost small-cap or international fund, then you can hold those funds in your IRA; Vanguard offers Small-Cap Index and Total International Index at low costs.
Re: Low Fee Index Funds?
Wow, that is good news. I had no idea!Johm221122 wrote: Basically, there the best you could ever hope for
John
Re: Low Fee Index Funds?
It was noted about that program that Jack must surely have meant ERs of 0.1% not 1.0%. 1.0% is probably a mid-high fee for mutual funds, but no investor should be paying more than about 0.00%-0.05% for total market index funds and maybe up to 0.20% for more specialized index or low cost active funds. (Little known fact: All Vanguard US Treasury bond funds are not index funds.)
Re: Low Fee Index Funds?
+1 ... you will want to add this ... most would agree you should have a sizable amount of international ...a lesser amount of additional small is needed because you have a small amount of small in your total indexes already ...grabiner wrote: The funds you listed don't include the small-cap (Russell 2000) or international (MSCI EAFE) indexes; check the expenses on those funds. If your 401(k) doesn't have a low-cost small-cap or international fund, then you can hold those funds in your IRA; Vanguard offers Small-Cap Index and Total International Index at low costs.
"Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. ..Don't look for the needle in the haystack. Just buy the haystack." Jack Bogle
Re: Low Fee Index Funds?
Noted by who .... I mean I noted he said 1 percent as well ... but was it noted by someone more than bloggers on BH?dbr wrote:It was noted about that program that Jack must surely have meant ERs of 0.1% not 1.0%.
Sadly, I think a lot of people either would be thrilled with ER around 0.50 because they would be much lower than they currently have.
"Owning the stock market over the long term is a winner's game. Attempting to beat the market is a loser's game. ..Don't look for the needle in the haystack. Just buy the haystack." Jack Bogle
Re: Low Fee Index Funds?
According to Vanguard, the average total stock market fund has an ER of 1.11%, so 1.00% is a bit below average. An average total bond market fund has an ER of 0.89%, so 1% would be a bit above average for a bond fund. Sad facts, but true.dbr wrote:It was noted about that program that Jack must surely have meant ERs of 0.1% not 1.0%. 1.0% is probably a mid-high fee for mutual funds, but no investor should be paying more than about 0.00%-0.05% for total market index funds and maybe up to 0.20% for more specialized index or low cost active funds. (Little known fact: All Vanguard US Treasury bond funds are not index funds.)
Re: Low Fee Index Funds?
I agree that you have one of the best plans out there. Find an asset allocation you are comfortable with, and contribute as much as you can. Then enjoy life.Vanner wrote:Wow, that is good news. I had no idea!Johm221122 wrote: Basically, there the best you could ever hope for
John
Re: Low Fee Index Funds?
Thank you for the responses.