Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

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Topic Author
ROIGuy
Posts: 2444
Joined: Sun May 08, 2016 10:10 am

Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

Post by ROIGuy »

I need help deciding whether to use the 401k plan International Index fund from BlackRock in my wife's 401k plan or the Vanguard International Index Fund; both are Foreign Large Blend funds. My wife’s 401k plan made dramatic changes last year, enough that I felt I needed to open a separate brokerage account for funds/sectors that were not funded in her 401k.

One of my dilemmas which I need advice is whether to fund the International Index fund through her 401k (BlackRock) or use the Vanguard International Fund (VDVIX) VANGUARD DEVELOPED MRKTS INDEX INVSTR that I opened with the brokerage account. I did this originally because I was not sure how the BlackRock Intl index was going to play out, and I hate the fact that you cannot get updated information. Here is the breakdown of the two funds, which fund do you think I should hold the International allocation in.

FYI This is the only INTL fund that her 401k has. I have some emerging markets and FTSE small cap in our Roths. So this would be our Large Cap INTL holdings.


BlackRock International Equity Index - (it trys to imitate the) MSCI ACWI ex‐US Index Lending Trust – 100% / Expense Ratio 0.08% (very inexpensive)
Vanguard International Fund (VDVIX) VANGUARD DEVELOPED MRKTS INDEX INVSTR Exp ratio 0.17% / Cost for trading in or out of the fund $75.00

BlackRock fund reinvests it's dividend into it's price
Vanguard fund pays quarterly dividend 0.35
Both funds are very similar in their holdings

This Blackrock fund was created for the 401k in July 2016
YTD Blackrock 13.46% / Not listed yet
YTD Vanguard 13.83 / 1 year 12.83% ( I added this fund in July 2016 and it is showing that I am up 19.66% since then)

In many ways they are very similar.
The two main differences are the expense ratio for the BlackRock fund is half of what the vanguard fund is and if I ever need to add or subtract money from it during a rebalancing there is no fee.
Blackrock fund reinvests the dividend back into the fund price, and Vanguard pays out the dividend
One my questions is chasing the dividend. I know technically the price drops when Vanguard pays me the dividend. So is it really worth it for me to keep this fund in our brokerage account when I can basically have the same fund in the 401k?

Until last year I was creating a dividend stream between our Roths and especially the 401k. Now that is all blown up on me because the other index funds they used to replace the vanguard funds in the 401k (total market fund), don’t pay out a dividend.

Should I just move the money I have in the Vanguard Intl fund in our 401k brokerage account into the our regular 401k or move the INTL 401k into the brokerage 401k? Or keep them as two separate accounts?
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Dale_G
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Location: Central Florida - on the grown up side of 85

Re: Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

Post by Dale_G »

There is no need to keep both funds. The BlackRock fund includes emerging markets while the Vanguard Developed Markets fund does not. Stick with the BlackRock fund, there is no need to pay a fee to purchase VDIVX .

The dividend issue is really a non-issue. In your regular 401k, the BlackRock accumulated dividends are reflected in an increase in the NAV (or price). For VDIVX in the 401k brokerage account, reinvested dividends are reflected in an increased number of shares. It amounts to the same thing in terms of the value of the fund holding.

Keep it simple.

Dale
Volatility is my friend
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Nate79
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Location: Delaware

Re: Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

Post by Nate79 »

I would use the Blackrock fund in a heartbeat. Honestly I would consider it crazy to pay a trading cost to buy the Vanguard fund which even has a higher ER.
Topic Author
ROIGuy
Posts: 2444
Joined: Sun May 08, 2016 10:10 am

Re: Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

Post by ROIGuy »

Thanks for the feedback!
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retiredjg
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Joined: Thu Jan 10, 2008 11:56 am

Re: Need help deciding between 401k Intl fund or 401k brokerage Intl Fund

Post by retiredjg »

Cost for trading in or out of the fund $75.00
There is no need to pay this cost. The other fund is just fine.
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