Page 1 of 1

Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 8:36 pm
by cleague
Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)

Re: Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 9:15 pm
by PFInterest
Vanguard institutional + one of those bond funds should be fine (whichever is more indexy...Didn't look)

Re: Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 9:18 pm
by njboater74
I don't think it makes much of a difference on the International Fund. May as well pick the lower cost option: IINCX. IINCX also looks like it has better balance across sectors:
http://portfolios.morningstar.com/fund/ ... ture=en-US

Not sure why they have two similar bond funds. Probably won't make much of a difference there either, I'd probably go with TCW, since I don't usually go for foreign bonds (Pimco is 20% foreign), but if that's your personal preference to have foreign bonds, nothing wrong with that.

Re: Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 9:18 pm
by njboater74
They're both good bond funds, as actively managed bond funds go.

Re: Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 9:42 pm
by cleague
Thanks for the input yall! :D

Re: Unsure where to start with 401k choices

Posted: Tue Jun 20, 2017 10:01 pm
by TIAX
Those bond funds aren't great so if you have access to a better fund somewhere else (like an IRA, HSA, or taxable account), I would go 100% Vanguard Institutional Index Fund(VINIX)(0.04%).

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 9:35 am
by BolderBoy
TIAX wrote:Those bond funds aren't great so if you have access to a better fund somewhere else (like an IRA, HSA, or taxable account), I would go 100% Vanguard Institutional Index Fund(VINIX)(0.04%).
OP - you didn't say how old the family member is. I'd probably second the above depending upon her age.

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 10:44 am
by BogleAlltheWay
I agree with that you should see if they can hold 100% Vanguard Institutional Index Fund and get bonds from another account.

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 11:03 am
by flamesabers
While Vanguard is the clear winner for the equity fund, the bond funds leave a lot to be desired I think. Perhaps she could put a bonds fund in a IRA or HSA? Or even go with I-Bonds to fulfill her bond allocation? If she wants international equity, I recommend she put it in a taxable account.

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 11:14 am
by ruralavalon
cleague wrote:Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)
I suggest Vanguard Institutional Index Fund (VINIX) ER 0.04% for domestic stocks, and PIMCO Total Return Institutional (PTTRX) ER 0.47% for bonds, and just skipping the international stock funds.

The expense ratios on the international stock funds are too high (0.83-1.05%) to even consider in my opinion. The expense ratios are high enough to cancel the historically expected diversification benefit (0.75%) from investing in international stocks.

The PIMCO fund even though actively managed is a very good intermediate-term bond fund with a moderate expense ratio. There is no good reason to avoid using this fund in my opinion.

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 12:12 pm
by Valuethinker
ruralavalon wrote:
cleague wrote:Hi Bogleheads,

I'm trying to help out a family member with sorting through her 401k choices. I think I've converted her to the idea of a three fund portfolio and would like some input on the best options out of the list below. I know the ERs aren't the best with the exception of that one lonely Vanguard fund, but at this time, she does not want to move the 401k. I'm guessing Vanguard will be the way to go for US stocks, but any thoughts on the international funds/bonds? Thanks in advance for the advice!

Stocks
Blue Chip Growth Fund (TRBCX)(0.72%)
Fidelity Contrafund (FCNTX)(0.68%)
Fidelity Small Cap Discovery (FSCRX)(1.01%)
Hennessy Focus Institutional(HFCIX)(1.13%)
Invesco Small Cap Value Y(VSMIX)(0.87%)
Ivy International Core Equity N(IINCX)(0.83%)
JP Morgan Mid Cap Value L(FLMVX)(0.75%)
Oakmark Equity and Income I(OAKBX)(0.89%)
Oakmark International I(OAKIX)(1.05%)
Putnam Equity Income R6(PEQSX)(0.55%)
Vanguard Institutional Index Fund(VINIX)(0.04%)
Wells Fargo Small Co Grow (WSCGX)(0.95%)

Bonds
Pimco Total Return Institutional Fund(PTTRX)(0.47%)
TCW Total Return Bond I(TGLMX)(0.49%)
I suggest Vanguard Institutional Index Fund (VINIX) ER 0.04% for domestic stocks, and PIMCO Total Return Institutional (PTTRX) ER 0.47% for bonds, and just skipping the international stock funds.

The expense ratios on the international stock funds are too high (0.83-1.05%) to even consider in my opinion. The expense ratios are high enough to cancel the historically expected diversification benefit (0.75%) from investing in international stocks.

The PIMCO fund even though actively managed is a very good intermediate-term bond fund with a moderate expense ratio. There is no good reason to avoid using this fund in my opinion.
The above is a good analysis.

International funds the fees are too high, and should be avoided in this account. VINIX will be about 60% of quoted world developed stocks by market cap. It's enough.

If there is a cheaper way to get bonds in another account I would do that and just be 100% in the above fund. If not, then the PIMCO fund is probably fairly OK.

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 12:18 pm
by Dottie57
PFInterest wrote:Vanguard institutional + one of those bond funds should be fine (whichever is more indexy...Didn't look)
+1

Re: Unsure where to start with 401k choices

Posted: Wed Jun 21, 2017 7:23 pm
by cleague
Thanks again for all the help! I think y'all are probably right that there's not much benefit to international funds in this account. Will go with the VINIX and see what she wants to do about the bonds. She's in her 50s so I don't want to be too aggressive stock wise.