ING-branded Vanguard TR options for 457/401k and hidden fees

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ING-branded Vanguard TR options for 457/401k and hidden fees

Postby EarlyBird901 » Thu Aug 25, 2011 10:07 pm

Is anyone familiar with ING-branded versions of Vanguard TR funds in a 457b or 401k plan?

I see the ING/Vanguard prospectus claims the ER of these funds are identical to Vanguard, but I also notice that the ING-branded versions don't have the same NAV value per share, and don't pay any dividends.

For example (I can't post links yet):
www6 ingretirementplans com/custom/vanguard_target_2030.pdf

I am trying to determine what fees (Sub-TA 12b-1, etc.) are being charged by ING, but I cannot find any written information and have inquired directly with the plan administrator who assured me (verbally) there are no hidden fees.

Nonetheless, I remain concerned about the differing NAVs per share as compared to Vanguard's equivalent offerings, and also the absence of paid dividends, but it's difficult to determine how much is being extracted, if anything.

The other non-Vanguard funds offered by my plan are more opaque and don't even have ticker symbols.

If anyone could help shed light on ING-branded Vanguard TR funds, it would be much appreciated.
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Postby pkcrafter » Fri Aug 26, 2011 1:11 am

I don't think it's correct to call the funds ING-branded. I'm not sure about this, but if it's a 457 the Vanguard funds may be in an annuity wrapper. That would explain the different NAV. The ER of the funds should be between 0.16 and 0.19%. There would not be any 12b-1 fee because it would show up in the ER. TR funds, even institutional class, should pay a small dividend. Is ING claiming there is no dividend?

No hidden fees? The plan has plenty of hidden fees, but the funds themselves do not. The expense ratio is not the only fee you pay, and I'd guess the plan fees are harder to find in a 457 than a 401k.


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Postby dbr » Fri Aug 26, 2011 8:13 am

I suspect the dividend is added back into the NAV rather than shown as a payment to the account.
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Postby synergy » Fri Aug 26, 2011 8:35 am

The State of Ct retirement plan is handled by ING. My spouse is enrolled and has mostly Vanguard funds in her 403. The plan buys institutional shares rather than retail shares so that is one difference to be aware of. Additionally, the quarterly ING statement is very clear about the fees that ING is charging each fund. While I do not have the information readily available, the ING fees are very reasonable, probably because they had to offer good terms to get the State contract. The institutional costs for Vanguard funds are similar or better than the retail ERs.

I don't know about other ING plans but the CT plan is good as regarding fees and choices of funds.
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Postby synergy » Fri Aug 26, 2011 8:49 am

The OPs question about ING made me curious about the ING plan. For CT, the TIPs fund is valued at 10.94 a share today, the same as on the Vanguard site for Investor, Admiral or ETF. The ER is .21 when all the fees are added together. This is .01 less than the Investor fee at Vanguard and .1 more that the ETF and Admiral fees. ING then adds a small fee to administrate the plan for the State. While not as good as investing directly with Vanguard, not a bad plan as far as I can tell.
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Postby dbr » Fri Aug 26, 2011 9:02 am

synergy wrote:The OPs question about ING made me curious about the ING plan. For CT, the TIPs fund is valued at 10.94 a share today, the same as on the Vanguard site for Investor, Admiral or ETF. The ER is .21 when all the fees are added together. This is .01 less than the Investor fee at Vanguard and .1 more that the ETF and Admiral fees. ING then adds a small fee to administrate the plan for the State. While not as good as investing directly with Vanguard, not a bad plan as far as I can tell.


In what form do you see the dividends? Are they automatically reinvested, deposited to a cash fund, or do you elect a choice?
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Postby Default User BR » Fri Aug 26, 2011 12:09 pm

dbr wrote:I suspect the dividend is added back into the NAV rather than shown as a payment to the account.

I would guess so too. In my company's plan, the only fund that pays a separate dividend is the company stock fund.


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Postby synergy » Fri Aug 26, 2011 7:36 pm

dbr wrote:In what form do you see the dividends? Are they automatically reinvested, deposited to a cash fund, or do you elect a choice?


Sorry have not paid attention. Will look hard at next ING statement.
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Postby Madd Hatter » Fri Aug 26, 2011 10:35 pm

I used to work in their Retirement Plan call center, so I'm getting a kick...

Whatever the one pager for the fund says for expenses (top left section), that's what it is. Many of the plans, especially for larger employers, do in fact use collective trusts, institutional shares, and so on. So no ticker symbols, no matching expenses to retail funds.

The other thing to check would be if your employer puts any of the plan fees on you. Many do. This should be detailed in your statement's transaction history (ie a $20 charge ever quarter).

After these two things, should be in the clear.
(The State of CT plan is a pretty good plan, as is INGs plan for their employees)
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Postby EarlyBird901 » Fri Aug 26, 2011 11:14 pm

Thanks everyone for your evaluation, including Madd Hatter for your recent response.

The plan administrator charges approximately $30/yr for plan management, but common sense tells me that if ING charged nothing in excess of Vanguard's fees, then they would soon be out of business.

It still seems odd that ING lists a unit value for Vanguard TR2030 (VTHRX) of, say, $9.9119/share when the Vanguard lists the unit value as $20.68/share.

If there were no advantage to ING, it would seem to be a lot simpler for them to just pass on the Vanguard funds are they are without alteration and absence of dividends.
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Postby sscritic » Fri Aug 26, 2011 11:26 pm

EarlyBird901 wrote:Thanks everyone for your evaluation, including Madd Hatter for your recent response.

The plan administrator charges approximately $30/yr for plan management, but common sense tells me that if ING charged nothing in excess of Vanguard's fees, then they would soon be out of business.

It still seems odd that ING lists a unit value for Vanguard TR2030 (VTHRX) of, say, $9.9119/share when the Vanguard lists the unit value as $20.68/share.

If there were no advantage to ING, it would seem to be a lot simpler for them to just pass on the Vanguard funds are they are without alteration and absence of dividends.

Read about collective investment trusts (CITs) as suggested by Madd Hatter. You probably own units of a collective trust. You don't own VTHRX, but the trust does. When VTHRX pays dividends, they are not paid to you (you don't own the shares). They are paid to the trust and your unit value goes up. If you owned shares, the NAV would go down when the dividend is paid. Your unit value doesn't. Also, the starting unit value doesn't have to equal the NAV. The trust could buy 100,000 shares and issue 500,000 units.

Here is one place to start (google will give you many others):
http://www.modernsaver.com/collective-t ... utual-fund

P.S. don't mix terms. A mutual fund has a NAV, not a unit value. The CIT has a unit value, not a NAV (it actually does, but it is not called that).
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Postby synergy » Sun Aug 28, 2011 7:33 pm

dbr wrote:In what form do you see the dividends? Are they automatically reinvested, deposited to a cash fund, or do you elect a choice?


I went on line to check transactions to Total Bond Institutional Fund and on a monthly basis there is a deposit called Investment Earnings. Also, there is a monthly deduction called Fees. All transactions are handled in terms of shares and the NAV is the same as the market listing.

Caution, this only applies to the ING product for State of Ct employees. Other plans may vary in how they handle 403 plans.
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Postby dbr » Sun Aug 28, 2011 7:39 pm

synergy wrote:
dbr wrote:In what form do you see the dividends? Are they automatically reinvested, deposited to a cash fund, or do you elect a choice?


I went on line to check transactions to Total Bond Institutional Fund and on a monthly basis there is a deposit called Investment Earnings. Also, there is a monthly deduction called Fees. All transactions are handled in terms of shares and the NAV is the same as the market listing.

Caution, this only applies to the ING product for State of Ct employees. Other plans may vary in how they handle 403 plans.


So that would be an example where one can indeed correlate a ticker, the NAV, dividend payments, and the fact they are selling some of the shares to pay fees. Other combinations involve fixed number of shares with an increasing NAV less or not less fees and so on.
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ING Funds

Postby shepherd » Sun Aug 28, 2011 7:50 pm

I, too, used to work for ING. While I can't comment on what has been mentioned previously, I can tell you that the ING funds offered in the ING 401k plan had names such as ING Index Plus. Finally, after asking a few questions, I came to find out that Index Plus just meant plus fees. I would check your account statements very closely as my experience has been if you can't track back to a ticker, something is being hidden.
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Postby MossySF » Sun Aug 28, 2011 8:23 pm

I guess the best way is to compare returns against the actual Vanguard holdings. If Vanguard's 2010 returns was 10.45% and ING's equivalent was 10.35%, then ING charges 0.10% extra.
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Postby EarlyBird901 » Sun Aug 28, 2011 8:39 pm

Thanks Shepherd and MossySF.

Comparing the full-year performance to the Vanguard equivalent is the only way I know to get to the bottom of it.

And the only way I know to accomplish that with any accuracy is to leave an amount in one of the ING/Vanguard TR options without contributing to it during the year, and calculate percent increase or decrease from Jan 1 to Dec 31 and compare that to the native Vanguard fund, which is what I'm doing this year.

Assuming it's a CIT the only advantage due to economy of scale I can see would be to ING, rather than the investor, since the claimed native ER is the same as Vanguard individual investor ER.
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Postby boredinks » Sun Aug 28, 2011 8:50 pm

ING is one of the companies that offers our state 457 plan. I search google for state of kansas 457 plan and then I choose portfolio expense calc and it shows all the fees associated with the funds. Down at the bottom it gives the disclaimer about added fees.

The Total Expenses shown for the Vanguard Target Date Funds includes the annual 0.29% administrative fee.

http://www6.ingretirementplans.com/SponsorExtranet/KS/

I can only assume they would provide you with something similar that gives you all the fees. I have not been able to match mine up to any symbols either so I have to update my prices for ing manually in my spreadsheets.
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Re: ING Funds

Postby Default User BR » Mon Aug 29, 2011 1:13 am

shepherd wrote:I would check your account statements very closely as my experience has been if you can't track back to a ticker, something is being hidden.

It's very common in large plans to use privately managed funds that have no tickers. Those (like mine) often have very low expenses.



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