Input on allocating funds for 401(k)

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InvestoGuy
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Joined: Thu Feb 11, 2010 1:34 pm

Input on allocating funds for 401(k)

Post by InvestoGuy » Tue Sep 04, 2012 3:51 pm

I am helping someone select funds for their 401(k) plan. To make a long story short, the 401(k) plan offers Index funds for the all major asset classes except the Small Cap. The only Small Cap funds offered are:
ALLNZ NFJ SMCAPVAL I (PSVIX): e/r 0.86% and
Royce Value Plus Fund Institutional Class (RVPIX): e/r 1.06%

Based on the high e/r I am leaning towards NOT including one of these funds at all and totally eliminating the small cap asset class.
Is this a reasonable strategy?
Thanks.

Grt2bOutdoors
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Location: New York

Re: Input on allocating funds for 401(k)

Post by Grt2bOutdoors » Tue Sep 04, 2012 3:55 pm

Does it offer Total Stk Market index or a combination of Large Cap Index + Extended Index? If so, eliminate the small cap active options with no worries.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

InvestoGuy
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Re: Input on allocating funds for 401(k)

Post by InvestoGuy » Tue Sep 04, 2012 3:59 pm

GRT2BOUTDOORS wrote:Does it offer Total Stk Market index or a combination of Large Cap Index + Extended Index? If so, eliminate the small cap active options with no worries.
Yes it does offer the Spartan 500 Index Fund for large caps and the Spartan Extended Market Index Fund for mid caps.

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BolderBoy
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Re: Input on allocating funds for 401(k)

Post by BolderBoy » Tue Sep 04, 2012 4:02 pm

I just went through this yesterday with a friend and the literature she provided from Fidelity showed Spartan Extended Market Index to cover both mid-cap and small-cap.

So we will use both the Spartan 500 Index and the EMI to approximate the total market (a bit shy at only 3800 stocks between them) for her.

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hoppy08520
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Re: Input on allocating funds for 401(k)

Post by hoppy08520 » Tue Sep 04, 2012 5:05 pm

InvestoGuy wrote:
GRT2BOUTDOORS wrote:Does it offer Total Stk Market index or a combination of Large Cap Index + Extended Index? If so, eliminate the small cap active options with no worries.
Yes it does offer the Spartan 500 Index Fund for large caps and the Spartan Extended Market Index Fund for mid caps.
Bingo. Hold those two funds in an 4:1 ratio (80% / 20%) to Approximate Total Stock Market. Extended Market is really a mid/small cap fund.

According to Morningstar (http://portfolios.morningstar.com/fund/ ... ture=en-US) , FSEMX is 46.48% medium, 34.03% small and 14.41% micro.

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