Please help me select a 401(k) Investment Option, Thank you!

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fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Fri Feb 10, 2017 10:23 am

Hi, my workplace has very limited selection for 401(k) plans. But of course, a 401(k) is to be maxed out regardless of how bad the choices are. Based on Expense Ratio, the only viable choices below are the S&P Index funds. I am looking to put my allocation into 34% S&P largecap; 33% into S&P midcap; and 33% into S&P smallcap. Does anyone else see any other viable options? Thanks a lot!


Investment Option Prices & YTD Returns as of 02/06/2017 Average Annual Total Returns through 01/31/2017 Expenses
Balance effective on Inv Manager or Sub-Advisor / Investment Option Ticker ID Share Price / Unit Value $*** YTD

Short-Term Fixed Income
N/A Morley Financial Services, Inc
Principal Stable Value Inst Fund [C]
-- - 21.3059690 0.12 a 0.12 0.37 1.50 1.33 1.35 2.23 3.65 01/09/1997 0.55%

Fixed Income
N/A Lord Abbett & Co, LLC
Lord Abbett High Yield Institutional Fund
LAHYX - 7.6600000 2.21 1.70 3.58 20.52 6.00 8.24 7.91 7.16 05/03/1999 0.74%
N/A PIMCO
PIMCO Real Return A Fund [14], [16],
PRTNX - 11.0400000 1.15 1.14 -0.93 4.58 1.10 0.28 4.29 5.59 01/29/1997 0.98%
N/A Principal Global Investors
Core Plus Bond R5 Fund , [14],[16], [22], [24],
PBMPX - 10.7800000 0.73 0.41 -1.54 3.40 2.33 2.48 3.63 4.23 12/06/2000 0.76%

Balanced/Asset Allocation
N/A BlackRock Advisors, LLC
BlackRock Global Allocation Institutional Fund [4], [11], [12],[16],
MALOX - 18.7000000 2.30 1.75 3.04 9.58 3.07 5.29 5.03 9.86 02/03/1989 0.87%
N/A Fidelity Management & Research
Fidelity Puritan Fund [12], [16],
FPURX - 21.2400000 3.21 2.33 3.95 11.94 6.90 9.76 6.04 10.92 04/16/1947 0.56%
N/A Multiple Sub-Advisors
Diversified Real Asset Inst Fund , [19], [22],
PDRDX - 11.0800000 2.59 2.22 3.37 12.96 -0.92 1.24 N/A 3.73 03/16/2010 0.89%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid Income CIT [11], [16], [18], [20],[23], [25], [27], [28], [29], [30],
-- - 15.6000000 1.17 0.91 0.58 6.07 3.02 3.75 N/A 6.01 07/07/2009 0.63%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2010 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 18.6800000 1.52 1.20 1.86 8.57 3.90 5.69 N/A 8.56 07/07/2009 0.63%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2015 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 19.9400000 1.68 1.38 2.58 10.08 4.44 6.54 N/A 9.50 07/07/2009 0.62%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2020 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 21.1900000 1.92 1.54 3.23 11.52 5.11 7.46 N/A 10.37 07/07/2009 0.62%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2025 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 22.0600000 2.08 1.71 3.92 12.83 5.61 8.11 N/A 10.96 07/07/2009 0.62%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2030 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 22.8300000 2.24 1.84 4.50 13.93 6.01 8.68 N/A 11.46 07/07/2009 0.62%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2035 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 23.5300000 2.44 2.00 5.11 14.97 6.37 9.15 N/A 11.90 07/07/2009 0.61%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2040 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 24.0600000 2.51 2.09 5.50 15.80 6.64 9.60 N/A 12.23 07/07/2009 0.62%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2045 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 24.6400000 2.62 2.21 5.91 16.58 6.84 9.90 N/A 12.59 07/07/2009 0.63%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2050 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 24.6400000 2.71 2.25 6.14 17.03 6.99 10.14 N/A 12.58 07/07/2009 0.63%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2055 CIT [11], [16], [18], [20], [23],[25], [27], [28], [29], [30],
-- - 24.6700000 2.71 2.25 6.37 17.51 7.10 10.24 N/A 12.60 07/07/2009 0.64%
N/A Multiple Sub-Advisors
Principal LifeTime Hybrid 2060 CIT [11], [12], [16], [18], [20],[23], [25], [27], [28], [29], [30],
-- - 12.0700000 2.72 2.30 6.37 17.61 7.12 N/A N/A 6.15 01/01/2014 0.64%

Large U.S. Equity
N/A Capital Research and Mgmt Co
American Funds Fundamental Investors R4 Fund [21],
RFNEX - 56.1500000 3.35 2.87 8.19 22.02 10.63 13.78 7.27 10.44 05/15/2002 0.65%
N/A Columbus Circle Investors
LargeCap Growth R5 Fund
PDPPX - 9.0100000 5.88 5.29 3.23 8.00 5.55 11.11 5.82 2.53 12/06/2000 0.88%
N/A Edge Asset Management, Inc.
Equity Income Inst Fund , [10],
PEIIX - 28.5100000 2.66 1.80 8.34 21.99 9.79 12.10 6.25 8.87 08/01/2000 0.52%
N/A Franklin Advisers, Inc
Franklin Growth Adv Fund [21],
FCGAX - 80.1200000 4.45 3.30 7.61 19.70 10.42 12.94 7.82 7.93 12/31/1996 0.63%
N/A Principal Global Investors
LargeCap S&P 500 Index Separate Account [A], [2], [6],[22],
-- - 113.1192783 2.54 1.90 7.75 19.93 10.75 13.98 6.92 9.34 01/01/1990 0.06%

Small/Mid U.S. Equity
N/A Columbus Circle Investors
MidCap Growth R5 Fund , [1],[13],
PHPPX - 7.7000000 5.62 4.66 7.77 19.01 6.21 12.36 7.78 2.80 12/06/2000 0.94%
N/A Dreyfus Corporation
Dreyfus Active Mid Cap A Fund [1],
DNLDX - 61.0300000 2.40 2.15 10.76 18.37 10.08 14.14 4.89 10.70 01/29/1985 1.13%
N/A Eagle Asset Management
Eagle Mid Cap Growth R5 Fund [1], [21],
HARSX - 48.8200000 4.58 4.03 9.90 22.36 8.28 13.44 9.63 12.97 12/28/2009 0.83%
N/A Fidelity Management & Research
Fidelity Low-Priced Stock Fund [1],
FLPSX - 50.3100000 1.68 1.17 7.30 16.27 6.83 12.05 7.42 13.66 12/27/1989 0.88%
N/A LA Capital Mgmt/Victory
MidCap Value I R5 Fund , [1],[10], [13], [17], [26],
PABVX - 14.3300000 2.58 1.93 10.49 25.59 7.88 12.81 6.84 9.42 06/01/2004 1.24%
N/A Principal Global Investors
MidCap S&P 400 Index Separate Account [A], [1], [2], [8],[22],
-- - 52.7658053 2.39 1.67 12.18 30.00 10.32 14.12 8.84 9.96 08/31/1999 0.06%
N/A Principal Global Investors
SmallCap S&P 600 Index Separate Account [A], [1], [2], [7],[22],
-- - 55.5752461 -0.38 -0.37 15.85 34.30 10.68 14.94 8.72 10.34 08/31/1999 0.06%
N/A Victory Capital Management
Victory Sycamore Established Value A Fund [1], [21],
VETAX - 37.1300000 2.68 1.96 10.26 28.43 12.56 14.96 9.82 10.16 05/05/2000 0.99%

International Equity
N/A Capital Research and Mgmt Co
American Funds EuroPacific Growth R4 Fund [4], [21],
REREX - 46.3700000 4.79 4.38 2.16 11.92 1.89 6.50 2.97 7.12 06/07/2002 0.85%
N/A Fidelity Management & Research
Fidelity International Index Investor Fund [2], [4],
FSIIX - 36.4800000 3.28 3.20 4.12 10.89 0.81 6.02 0.99 4.45 11/05/1997 0.19%

Other
N/A PIMCO
PIMCO Commodity Real Return Strategy A Fund [3],
PCRAX - 7.0900000 1.14 0.71 3.56 16.84 -11.73 -10.09 -3.79 1.69 11/29/2002 1.53%

Elbowman
Posts: 491
Joined: Tue Apr 03, 2012 2:25 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by Elbowman » Fri Feb 10, 2017 10:28 am

Fidelity International Index Investor Fund ... 0.19%

This looks fine for international. What's your plan for bonds?

fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Fri Feb 10, 2017 10:39 am

Elbowman wrote:Fidelity International Index Investor Fund ... 0.19%

This looks fine for international. What's your plan for bonds?
This is just for my 401(k). I have bonds in my IRA. Is there a reason why FSIIX at .19% is better than the S&P funds at .06%? Dividend?

Edit: would 25% each be viable? Keep in mind this is the beginning of a 401k so the amount contributed will be miniscule.

Elbowman
Posts: 491
Joined: Tue Apr 03, 2012 2:25 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by Elbowman » Fri Feb 10, 2017 11:38 am

fantasytensai wrote:Is there a reason why FSIIX at .19% is better than the S&P funds at .06%? Dividend?
It's not "better" in the sense that you would ever choose 100% FSIIX for your stocks. But it probably adds some amount of diversification, which makes it good to hold some of each. Below is a thread where people are debating the merits of holding international stocks:

viewtopic.php?t=161722

Yes, 25% each would be OK as long as you can stick with it. There will periods, possibly long periods (10+ years) where you small- and mid-caps will underperform your large-caps, and it may be emotionally challenging to stay the course during these times.

aristotelian
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Re: Please help me select a 401(k) Investment Option, Thank you!

Post by aristotelian » Fri Feb 10, 2017 11:47 am

I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.

fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Fri Feb 10, 2017 11:50 am

aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?

aristotelian
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Re: Please help me select a 401(k) Investment Option, Thank you!

Post by aristotelian » Fri Feb 10, 2017 11:56 am

fantasytensai wrote:
aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?
Yes, and even that would be a strong "tilt" toward smaller companies. See this thread for different ways to approximate the overall stock market:
https://www.bogleheads.org/wiki/Approxi ... ock_market

fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Fri Feb 10, 2017 12:03 pm

aristotelian wrote:
fantasytensai wrote:
aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?
Yes, and even that would be a strong "tilt" toward smaller companies. See this thread for different ways to approximate the overall stock market:
https://www.bogleheads.org/wiki/Approxi ... ock_market
Thanks! Based off this, assuming that the Principal funds don't deviate greatly from Vanguard funds, to mimick the market it would be 83% in large, 11% mid, and 6% small. I would also like to have 20% international in here, so that would mean 20% FSIIX, 66% largecap, 9% midcap, 5% small cap.

Thank you guys! Great source of information as usual!

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ruralavalon
Posts: 13943
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Location: Illinois

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by ruralavalon » Fri Feb 10, 2017 2:30 pm

fantasytensai wrote:
aristotelian wrote:
fantasytensai wrote:
aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?
Yes, and even that would be a strong "tilt" toward smaller companies. See this thread for different ways to approximate the overall stock market:
https://www.bogleheads.org/wiki/Approxi ... ock_market
Thanks! Based off this, assuming that the Principal funds don't deviate greatly from Vanguard funds, to mimick the market it would be 83% in large, 11% mid, and 6% small. I would also like to have 20% international in here, so that would mean 20% FSIIX, 66% largecap, 9% midcap, 5% small cap.

Thank you guys! Great source of information as usual!
What is your plan for bonds? Are you going to have any bond allocation at all ?

Do you have any IRAs? How much are you contributing annually to an IRA?

Do you receive an employer match in your 401k?

You should probably be contributing to an IRA if eligible.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Fri Feb 10, 2017 2:58 pm

ruralavalon wrote:
fantasytensai wrote:
aristotelian wrote:
fantasytensai wrote:
aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?
Yes, and even that would be a strong "tilt" toward smaller companies. See this thread for different ways to approximate the overall stock market:
https://www.bogleheads.org/wiki/Approxi ... ock_market
Thanks! Based off this, assuming that the Principal funds don't deviate greatly from Vanguard funds, to mimick the market it would be 83% in large, 11% mid, and 6% small. I would also like to have 20% international in here, so that would mean 20% FSIIX, 66% largecap, 9% midcap, 5% small cap.

Thank you guys! Great source of information as usual!
What is your plan for bonds? Are you going to have any bond allocation at all ?

Do you have any IRAs? How much are you contributing annually to an IRA?

Do you receive an employer match in your 401k?

You should probably be contributing to an IRA if eligible.
1. I hold bonds in my Roth IRA account.

2. I max my IRA every year.

3. Nope :(

4. I am!

fantasytensai
Posts: 470
Joined: Fri Sep 30, 2016 3:30 pm

Re: Please help me select a 401(k) Investment Option, Thank you!

Post by fantasytensai » Sat Feb 11, 2017 1:15 pm

fantasytensai wrote:
aristotelian wrote:
fantasytensai wrote:
aristotelian wrote:I agree with your fund selections, plus the international index if you want diversification. However, keep in mind that 66% in small and midcap would be very disproportionate to and (higher risk than) the actual stock market. A more conventional allocation would be something like a 3-2-1 ratio.
3-2-1 as in (speaking in the terms of percentages), 50% large cap, 33% mid cap, and 17% small cap?
Yes, and even that would be a strong "tilt" toward smaller companies. See this thread for different ways to approximate the overall stock market:
https://www.bogleheads.org/wiki/Approxi ... ock_market
Thanks! Based off this, assuming that the Principal funds don't deviate greatly from Vanguard funds, to mimick the market it would be 83% in large, 11% mid, and 6% small. I would also like to have 20% international in here, so that would mean 20% FSIIX, 66% largecap, 9% midcap, 5% small cap.

Thank you guys! Great source of information as usual!
So I changed my contribution to the above. I did some research on each of the funds and while I understand FSIIX is for diversification purposes, it's 10 year growth of 10k was....11k. I can't help but be a little concerned about this lack of growth, yet so far all the comments recommend FSIIX. Is it solely because it is an international fund?

aristotelian
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Re: Please help me select a 401(k) Investment Option, Thank you!

Post by aristotelian » Sat Feb 11, 2017 1:34 pm

fantasytensai wrote: So I changed my contribution to the above. I did some research on each of the funds and while I understand FSIIX is for diversification purposes, it's 10 year growth of 10k was....11k. I can't help but be a little concerned about this lack of growth, yet so far all the comments recommend FSIIX. Is it solely because it is an international fund?
I don't think it is a problem with the fund per se, it is just that is where the world economy has been the last 10 years. Japan and Europe have not done well, emerging markets have been up and down. There is an active thread about the pros and cons of international stock. FSIIX looks better at the 15, 5, and 1 year timeframes so it is somewhat cherrypicking to focus only on 10 years. Still, 10 years of flat growth is concerning.

My international allocation is only about 10%. In my opinion, you can get enough or even better diversification just by using bonds to complement your stock portfolio. Others believe firmly in international and would go higher than you.

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ruralavalon
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Re: Please help me select a 401(k) Investment Option, Thank you!

Post by ruralavalon » Sat Feb 11, 2017 1:55 pm

There is a lot of debate about how much to hold in international stocks. You get opinions all the way from 00% to 50% of stocks in international stocks.

Your 20% of stocks in international stocks is about right, in my opinion. You could Google "vanguard considerations for investing in non-U.S. equities" to find a Vanguard paper on this subject. Also you could use the Google search box (upper right) to find numerous forum discussions on this subject.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

VaR
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Re: Please help me select a 401(k) Investment Option, Thank you!

Post by VaR » Sat Feb 11, 2017 4:33 pm

You actually have four great options in your 401k, OP!

I like your 20/66/9/5 allocation.

Regarding the fact that international equities have appreciated less than U.S equities over a 10 year horizon, the question I have is whether this is due to earnings underperformance over the past 10 years or whether it is because international equities have had a lower "earnings multiple" expansion? If it's the latter, then it might be wrong to focus on recent past price performance to predict future performance.

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