Help me with 401k and 403b fund choices

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BogleMelon
Posts: 1503
Joined: Mon Feb 01, 2016 11:49 am

Help me with 401k and 403b fund choices

Post by BogleMelon » Sun Aug 12, 2018 9:03 pm

Hi,
I am trying to replicate the 3-fund portfolio using both Vanguard Roth IRA (me and spouse), my 401K and my spouse 403b.
No problem of course with the Vanguard funds. Both my 401K and my DW 403b is with Prudential.

I use the following 2 funds for the US stock section:
In my 401K I have Dryden S&P 500 Index Fund with ER 0.62%
In my DW 403b she has: Vanguard Institutional Index Fund (Institutional Shares) ER 0.12%
(I use Market extended fund in Vanguard Roth to complement buying the whole market) so this is not a problem either.

Now for Bonds part I have (both 401K and 403b):
Core Plus Bond / PGIM Fund ER: 0.97% (I dont use that)
Government Securities Enhanced Index / PGIM Fund ER: 0.97% (I don't use that)
DCP Stable Value Fund (Current fixed return rate: 2.33%) ER: 0% (I use that as a bond fund in addition to Vanguard total bond index fund)
Core Bond Enhanced Index / PGIM Fund ER: 0.25% (I don't use that)
Core Plus Bond / PGIM Fund ER: 0.38% (I don't use that)

For the international fund I have the following funds
(but I dont use any of them, instead I rebalance my international allocation using Vanguard International total index fund in the Roth IRA account):

International Blend / Pictet Asset Management Fund ER: 1.53%
Dodge & Cox International Stock Fund ER:0.64%
International Blend / Lazard Fund ER:0.86%
Oppenheimer Developing Markets Y ODVYX 1.07%

And on top of all of that I have: Vanguard Wellesley Income Fund (Admiral Shares) ER: 0.23% but I don't use it either as I am an index believer

Questions:
1- Are my selections OK given I want to replicate the 3-fund portfolio specially for the bonds section? Unfortunately total bond fund is not enough in Vanguard and i have to add more bonds in my 401K/403b to avoid having too much risk.
2- Do I miss any reasonable international fund here? Or they are all actively managed and not worth using them as a true Boglehead investor?
3- Am I not wise for skipping the Wellesley fund, specially at that low ER comparing to say Dryden S&P 500 Index Fund that I am using?

Thanks for the usual help!
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

BogleMelon
Posts: 1503
Joined: Mon Feb 01, 2016 11:49 am

Re: Help me with 401k and 403b fund choices

Post by BogleMelon » Mon Aug 13, 2018 1:29 pm

Any help? :|
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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ruralavalon
Posts: 14236
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Help me with 401k and 403b fund choices

Post by ruralavalon » Mon Aug 13, 2018 3:56 pm

BogleMelon wrote:
Sun Aug 12, 2018 9:03 pm
Hi,
I am trying to replicate the 3-fund portfolio using both Vanguard Roth IRA (me and spouse), my 401K and my spouse 403b.
No problem of course with the Vanguard funds. Both my 401K and my DW 403b is with Prudential.

I use the following 2 funds for the US stock section:
In my 401K I have Dryden S&P 500 Index Fund with ER 0.62%
In my DW 403b she has: Vanguard Institutional Index Fund (Institutional Shares) ER 0.12%
(I use Market extended fund in Vanguard Roth to complement buying the whole market) so this is not a problem either.

Now for Bonds part I have (both 401K and 403b):
Core Plus Bond / PGIM Fund ER: 0.97% (I dont use that)
Government Securities Enhanced Index / PGIM Fund ER: 0.97% (I don't use that)
DCP Stable Value Fund (Current fixed return rate: 2.33%) ER: 0% (I use that as a bond fund in addition to Vanguard total bond index fund)
Core Bond Enhanced Index / PGIM Fund ER: 0.25% (I don't use that)
Core Plus Bond / PGIM Fund ER: 0.38% (I don't use that)

For the international fund I have the following funds
(but I dont use any of them, instead I rebalance my international allocation using Vanguard International total index fund in the Roth IRA account):

International Blend / Pictet Asset Management Fund ER: 1.53%
Dodge & Cox International Stock Fund ER:0.64%
International Blend / Lazard Fund ER:0.86%
Oppenheimer Developing Markets Y ODVYX 1.07%

And on top of all of that I have: Vanguard Wellesley Income Fund (Admiral Shares) ER: 0.23% but I don't use it either as I am an index believer

Questions:
1- Are my selections OK given I want to replicate the 3-fund portfolio specially for the bonds section? Unfortunately total bond fund is not enough in Vanguard and i have to add more bonds in my 401K/403b to avoid having too much risk.
2- Do I miss any reasonable international fund here? Or they are all actively managed and not worth using them as a true Boglehead investor?
3- Am I not wise for skipping the Wellesley fund, specially at that low ER comparing to say Dryden S&P 500 Index Fund that I am using?

Thanks for the usual help!
It depends.

What is your desired asset allocation?

What are the sizes (as a percentage of the total portfolio), location, and type of each account you have?

What unds are offered in his 401k plan? What funds are offered in her 403b plan? Please give fund names, tickers and expense ratios.

Bogleheads investing does not require use of index funds. "Use index funds when possible." Wiki article, "Bogleheads® investment philosophy". Where work-based accounts are involved, you deal with what is available and coordinate investments among all accounts.

Dodge & Cox International Stock Fund (DODFX) ER 0.64% is a good actively managed international stock fund, is nicely diversified investing in both developed and emerging markets, and has a moderate expense ratio. In my opinion it is suitable for use in a three fund portfolio when a good international stock index fund is not available.

PGIM Core Bond Enhanced Index Fund, ER 0.38%, appears to be an actively managed Separate Account, benchmarked to the Bloomberg Barclays U.S. Aggregate Bond Index, see this pdf. It is not an index fund. It looks like a closet index fund (see Investopedia, "closet indexing"), meaning that although actively managed it appears to have tracked the index (the difference being about the amount of the expense ratio).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

BogleMelon
Posts: 1503
Joined: Mon Feb 01, 2016 11:49 am

Re: Help me with 401k and 403b fund choices

Post by BogleMelon » Mon Aug 13, 2018 4:26 pm

ruralavalon wrote:
Mon Aug 13, 2018 3:56 pm

PGIM Core Bond Enhanced Index Fund, ER 0.38%, appears to be an actively managed Separate Account, benchmarked to the Bloomberg Barclays U.S. Aggregate Bond Index, see this pdf. It is not an index fund. It looks like a closet index fund (see Investopedia, "closet indexing"), meaning that although actively managed it appears to have tracked the index (the difference being about the amount of the expense ratio).
Thank you for your reply. So in your opinion, would it be better to move from DCP STABLE VALUE to PGIM Core Bond Enhanced Index Fund to better replicate the bonds allocation in my portfolio?

To answer your questions: overall I am trying to maintain 15% bonds and 85% stocks and about 30% of my stocks allocation is international, whilst the 70% domestic.

Current funds in the Roth's: $53688, 401K and 403b: $18216
I can still rebalance using the Roth IRA's, but soon I may run out and need to use more bonds and international in the 401K/403b

Thank you again1
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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