401k is changing - need advise

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637jr
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Joined: Sun May 12, 2013 4:16 pm

401k is changing - need advise

Post by 637jr » Sun Mar 01, 2015 5:55 pm

My employer uses Merrill Lynch to run our 401k plan. I have been using an AA of 60/40 with the use of three funds in my 401k - S&P 500 index fund (expense 0.05), International index fund (expense 0.39) and PIMCO real return bond fund (expense 0.87). We were informed that in the next few months some funds will be removed and other funds will be added. Both the S&P index and the International index are going to be removed and I must move my monies to other funds available. I will list the funds (with expense) that I have to choose from and I am hoping to get some advise on were to transfer my monies to.

Loomis Sayles Strategic income fund (expense 0.70)
Invesco growth and income fund (expense 0.84)
MFS Massachusetts investors trust (expense 0.73)
Wells Fargo advantage Special Mid Cap value fund (expense 0.87)
JPMorgan Intepid Mid Cap fund (expense 0.93)
Invesco Mid Cap growth fund (expense 1.15)
AllianzGI NFJ small cap value fund (expense 1.18)
JPMorgan US small company fund (expense 0.84)
Franklin Small cap growth fund (expense 1.21)
American AMCAP fund (expense 1.03)
Dreyfus opportunistic midcap value fund (expense 1.18)
Invesco Equally-weighted S&P 500 fund (expense 0.31)
Oppenheimer developing markets fund (expense 1.32)
American century global growth fund (expense 0.89)
American funds EuroPacific growth fund (expense 1.14)
Lazard Inernational strategic equity portfolio fund (expense 0.86)
Invesco International growth fund (expense 1.34)

I was also wondering if my PIMCO bond fund (expense 0.87) should be moved to my other option in the bond funds - the Lord Abbett Short duration income fund (expense 0.58)?

Any suggestions and help would be great - in the past I have trusted in your views and advise and it has been working out very well for me. Thank you in advance.

retiredjg
Posts: 34225
Joined: Thu Jan 10, 2008 12:56 pm

Re: 401k is changing - need advise

Post by retiredjg » Sun Mar 01, 2015 6:11 pm

First, you should complain.

I suppose I would use the 500 Index because it has a low expense ratio. However, it is not an index fund in the sense you know index funds. Notice the "equally weighted" part of the name.

Hold your international allocation in an IRA if possible.
I was also wondering if my PIMCO bond fund (expense 0.87) should be moved to my other option in the bond funds - the Lord Abbett Short duration income fund (expense 0.58)?
I don't see that one on the list.

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: 401k is changing - need advise

Post by retiredjg » Mon Mar 02, 2015 9:13 am

Do you have an IRA? Is there an employer match?

You could put your international allocation into an IRA/Roth IRA at Vanguard and take advantage of lower costs. If this is not feasible, I guess I'd use the Lazard fund iin the 401k.

WHL
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Joined: Mon Dec 10, 2012 2:22 pm

Re: 401k is changing - need advise

Post by WHL » Mon Mar 02, 2015 11:02 am

Wow. I absolutely second the need for a loud complaint. Removing that S&P fund is a ridiculous fee grab.

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ruralavalon
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Re: 401k is changing - need advise

Post by ruralavalon » Mon Mar 02, 2015 11:36 am

Yes, do lodge a complaint about the loss of the S&P 500 index fund (expense 0.05) and the International index fund (expense 0.39).

If the complaint gets no results use Invesco Equally-weighted S&P 500 fund (expense 0.31).

I would not use any of the international funds offered in the 401k.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: 401k is changing - need advise

Post by retiredjg » Mon Mar 02, 2015 11:36 am

WHL wrote:Wow. I absolutely second the need for a loud complaint. Removing that S&P fund is a ridiculous fee grab.
I don't think it is a fee grab because it does take more work (more money) to maintain an equally weighted index. But it might be chasing returns since this index does sometimes outperform the cap-weighted index.

Here's something I stumbled on in the Wiki. http://www.bogleheads.org/wiki/Equal_weighted_indices

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Garco
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Re: 401k is changing - need advise

Post by Garco » Mon Mar 02, 2015 1:03 pm

Several of the newly offered funds are decent in principle, but the class (ER) of the stock is absurd. I am thinking especially about the AF Europacific Growth. It's a fine (managed) fund. I own it. But my ER is .49 (class R6), not 1.14.

Meantime you could do a lot worse than the Invesco Equally Weighted Fund. For now, I'd put all your equity there.

I would stick with the PIMCO total return (if that's what you have) rather than moving to a more narrowly based bond fund.

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