401K fund allocation advice

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dpnsubscribe
Posts: 8
Joined: Thu Oct 26, 2017 2:44 pm

401K fund allocation advice

Post by dpnsubscribe » Tue Aug 14, 2018 10:19 pm

Please suggest best fund allocation for my situation.
Age: 42, Married


Current Allocation


Name/Inception Date
Gross Expense Ratio** 1 Year 3 Year 5 Year 10 Year/LOF* Current Allocation

VERIZON 2040 FUND12/29/2006
0.59% 10.52% 8.70% 8.10% 7.03% 75.9%
VERIZON 2045 FUND12/29/2006
0.59% 10.64% 8.76% 8.13% 7.03% 21.53%
INTL COMPANY INDEX04/30/1992
0.09% 6.95% 5.35% 6.13% 2.74% 1.06%
US LARGE CO INDEX12/31/1990
0.02% 16.22% 12.51% 13.11% 10.69% 0.12%
VERIZON STOCK FUND12/30/1983
0% 11.71% 8.20% 5.52% 10.25% 1.39%

Funds Available

TARGET DATE FUNDS (TIER 1)

Name/Inception Date
Gross Expense Ratio** 1 Year 3 Year 5 Year 10 Year/LOF* Current Allocation

RET INCOME & INVEST12/29/2006
0.51% 4.89% 5.58% 4.34% 4.40%
VERIZON 2020 FUND12/29/2006
0.53% 6.31% 6.80% 5.48% 5.07%
VERIZON 2025 FUND12/29/2006
0.55% 7.64% 7.67% 6.37% 5.58%
VERIZON 2030 FUND12/29/2006
0.57% 9.42% 8.47% 7.33% 6.41%
VERIZON 2035 FUND12/29/2006
0.58% 10.05% 8.33% 7.85% 6.89%
VERIZON 2040 FUND12/29/2006
0.59% 10.52% 8.70% 8.10% 7.03% 75.9
VERIZON 2045 FUND12/29/2006
0.59% 10.64% 8.76% 8.13% 7.03% 21.53
VERIZON 2050 FUND12/29/2006
0.59% 10.64% 8.76% 8.13% 7.03%
VERIZON 2055 FUND01/04/2010
0.59% 10.64% 8.75% 8.12% 8.63%
VERIZON 2060 FUND02/02/2015
0.59% 10.64% 8.71% N/A 8.45%

ASSET CLASS FUNDS (TIER 2)

Name/Inception Date
Gross Expense Ratio** 1 Year 3 Year 5 Year 10 Year/LOF* Current Allocation

EMERGING MARKETS12/29/2006
0.98% 2.15% 8.16% 4.56% 2.62%
INTL COMPANY12/30/1994
0.63% 6.13% 5.03% 6.24% 4.00%
INTL COMPANY INDEX04/30/1992
0.09% 6.95% 5.35% 6.13% 2.74% 1.06
REIT FUND05/30/1997
0.41% 3.02% 6.45% 8.26% 8.55%
SMALL CAP EQTY INDX01/31/2017
0.03% 18.87% N/A N/A 16.21%
US LARGE CO INDEX12/31/1990
0.02% 16.22% 12.51% 13.11% 10.69% 0.12
US LARGE COMPANY12/30/1994
0.41% 15.76% 11.56% 13.05% 10.96%
US SMALL COMPANY12/30/1994
0.62% 21.02% 11.09% 11.64% 11.87%
VERIZON STOCK FUND12/30/1983
0% 11.71% 8.20% 5.52% 10.25% 1.39
INFLATION PROTECTED01/31/2017
0.20% 1.29% N/A N/A 1.23%
INTERMEDIATE US BOND01/04/2016
0.18% -0.69% N/A N/A 1.57%
US BOND INDEX FUND01/31/2017
0.04% -0.86% N/A N/A 1.14%
US CORE BOND FUND01/31/2017
0.28% -0.47% N/A N/A 1.63%
INST GOVT MONEY MKT10/01/2009
0.23% 1.26% 0.61% 0.36% 0.21%
MM PORTFOLIO12/29/1989
0.13% 1.67% 1.02% 0.66% 0.59%
PRIVATE GLOBAL RE12/29/2006
0.67% 8.79% 8.44% 9.91% 3.58%

jalbert
Posts: 3588
Joined: Fri Apr 10, 2015 12:29 am

Re: 401K fund allocation advice

Post by jalbert » Tue Aug 14, 2018 10:24 pm

To provide recommendations, what is needed for each fund in your posting is:

Fund name, fund ticker symbol, expense ratio.

The expense ratio should be from the 401K as this can vary from the expense ratio published by the fund provider.
Index fund investor since 1987.

PFInterest
Posts: 2125
Joined: Sun Jan 08, 2017 12:25 pm

Re: 401K fund allocation advice

Post by PFInterest » Tue Aug 14, 2018 10:29 pm

You do know you need to provide us your AA info right?

dpnsubscribe
Posts: 8
Joined: Thu Oct 26, 2017 2:44 pm

Re: 401K fund allocation advice

Post by dpnsubscribe » Tue Aug 14, 2018 10:46 pm

jalbert wrote:
Tue Aug 14, 2018 10:24 pm
To provide recommendations, what is needed for each fund in your posting is:

Fund name, fund ticker symbol, expense ratio.

The expense ratio should be from the 401K as this can vary from the expense ratio published by the fund provider.
I included the fund name, expense ratio, avg rate of return over the last few years. I couldnt find the ticker symbol.

Thanks

dpnsubscribe
Posts: 8
Joined: Thu Oct 26, 2017 2:44 pm

Re: 401K fund allocation advice

Post by dpnsubscribe » Tue Aug 14, 2018 10:50 pm

PFInterest wrote:
Tue Aug 14, 2018 10:29 pm
You do know you need to provide us your AA info right?
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 30% of stocks

Thanks

jalbert
Posts: 3588
Joined: Fri Apr 10, 2015 12:29 am

Re: 401K fund allocation advice

Post by jalbert » Wed Aug 15, 2018 12:04 am

The simplest thing would be to just hold a target year fund aligned with your retirement year, possibly adjusting the year to the 70/30 portfolio.

If you want to manage it yourself to get lower expense ratios, you can use these fund products with ERs shown. The allocation:

30% US BOND INDEX FUND 0.04%
20% INTL COMPANY INDEX 0.09%
35% US LARGE CO INDEX 0.02%
15% SMALL CAP EQTY INDX 0.03%

might be reasonable. Would need to know which indices are being tracked to be more specific.
Index fund investor since 1987.

PFInterest
Posts: 2125
Joined: Sun Jan 08, 2017 12:25 pm

Re: 401K fund allocation advice

Post by PFInterest » Wed Aug 15, 2018 8:04 am

dpnsubscribe wrote:
Tue Aug 14, 2018 10:50 pm
PFInterest wrote:
Tue Aug 14, 2018 10:29 pm
You do know you need to provide us your AA info right?
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 30% of stocks

Thanks
- you need to edit your entire post to look like this:
viewtopic.php?t=6212

- please delete all those %, you only need to leave ER

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ruralavalon
Posts: 13751
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: 401K fund allocation advice

Post by ruralavalon » Wed Aug 15, 2018 10:35 am

jalbert wrote:
Wed Aug 15, 2018 12:04 am
The simplest thing would be to just hold a target year fund aligned with your retirement year, possibly adjusting the year to the 70/30 portfolio.

If you want to manage it yourself to get lower expense ratios, you can use these fund products with ERs shown. The allocation:

30% US BOND INDEX FUND 0.04%
20% INTL COMPANY INDEX 0.09%
35% US LARGE CO INDEX 0.02%
15% SMALL CAP EQTY INDX 0.03%

might be reasonable. Would need to know which indices are being tracked to be more specific.
dpnsubscribe --

Can you give the ticker symbol and full fund name (including the name of the company managing the fund) for each of those four funds? Can you state the full name of the index used by each of those four funds?

Since there are no ticker symbols those four funds are probably not mutual funds, they are probably Commingled Investment Trusts (CITs) or Separate Accounts.

If so then your 401k materials or the 401k website will contain short fact sheet (perhaps just 1-2 pages) for each fund, which gives:
1) the name of the company managing the fund (like Northern Trust, BlackRock, Vanguard, Fidelity, etc.);
2) the fund's investing strategy, including the index used;
3) the expenses charged the plan participant; and
4) the fund performance as compared to the index.


It is often better coordinate investments across all accounts (including your Roth IRAS, link to 2017 "'portfolio review"), in other words treat all accounts together as a single unified portfolio, rather than view each account separately.

In short for better more complete suggestions, you should post the entire set of your current financial details. Please see this for format and information needed: "Asking Portfolio Questions". You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

dpnsubscribe
Posts: 8
Joined: Thu Oct 26, 2017 2:44 pm

Re: 401K fund allocation advice

Post by dpnsubscribe » Tue Aug 21, 2018 4:59 pm

All the funds are managed by Fidelity:
TPTT VERIZON 2045 FUND Expense ratio 0.59%
TPTS VERIZON 2040 FUND Expense ratio 0.59%
TRSR Verizon stock fund Expense ratio 0%
TPNR International company index Expense ratio 0.09%
TPNS US Large company index Expense ratio 0.02%

Thanks

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ruralavalon
Posts: 13751
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: 401K fund allocation advice

Post by ruralavalon » Tue Aug 21, 2018 7:06 pm

dpnsubscribe wrote:
Tue Aug 21, 2018 4:59 pm
All the funds are managed by Fidelity:
TPTT VERIZON 2045 FUND Expense ratio 0.59%
TPTS VERIZON 2040 FUND Expense ratio 0.59%
TRSR Verizon stock fund Expense ratio 0%
TPNR International company index Expense ratio 0.09%
TPNS US Large company index Expense ratio 0.02%

Thanks
What is the index used by each of the index funds?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

dpnsubscribe
Posts: 8
Joined: Thu Oct 26, 2017 2:44 pm

Re: 401K fund allocation advice

Post by dpnsubscribe » Tue Aug 21, 2018 9:24 pm

TPNS US Large company index uses S&P 500

TPNR International company index uses MSCI EAFE (G)
(The MSCI Europe, Australasia and Far East Index is an unmanaged market capitalization-weighted index designed to represent the performance of developed stock markets outside the United States and Canada.)

TPTT VERIZON 2045 FUND uses the following for benchmark/comparison

Verizon 2045 Custom Blend
A custom benchmark, established by VIMCO, composed of the following components: the Russell 1000® Index; the Russell 2000® Index; the Financial Times Stock Exchange (FTSE) National Association of Real Estate Investment Trusts, Inc (NAREIT) Equity REIT Index; the Custom International Index, which is composed of the MSCI EAFE GDP Index - MSCI Inc. (formerly known as Morgan Stanley Capital International) Europe, Australasia, Far East international equity market index, weighted by each country's Gross Domestic Product (EAFE-GDP), the MSCI EM Index-Net - MSCI Inc. Emerging Markets Index (formerly known as the Morgan Stanley Emerging Markets Index), and the S&P/Citigroup - Extended Market Index (Europe, Pacific-Asia Composite), a small cap non-U.S. equity market index; the MSCI EM Index-Net; the Bloomberg Barclays Global Aggregate Bond Index Unhedged; and the Hurdle Rate (12%) - typically used for absolute return strategies that do not track to a market benchmark (a hurdle rate is a target percentage for an increase in a fund's value each year). The benchmark weights will dynamically change over time based on the movement of each fund along the glide path

TPTS VERIZON 2040 FUND

Verizon 2040 Custom Blend
A custom benchmark, established by VIMCO, composed of the following components: the Russell 1000® Index; the Russell 2000® Index; the Financial Times Stock Exchange (FTSE) National Association of Real Estate Investment Trusts, Inc (NAREIT) Equity REIT Index; the Custom International Index, which is composed of the MSCI EAFE GDP Index - MSCI Inc. (formerly known as Morgan Stanley Capital International) Europe, Australasia, Far East international equity market index, weighted by each country's Gross Domestic Product (EAFE-GDP), the MSCI EM Index-Net - MSCI Inc. Emerging Markets Index (formerly known as the Morgan Stanley Emerging Markets Index), and the S&P/Citigroup - Extended Market Index (Europe, Pacific-Asia Composite), a small cap non-U.S. equity market index; the MSCI EM Index-Net; the Bloomberg Barclays Global Aggregate Bond Index Unhedged; and the Hurdle Rate (12%) - typically used for absolute return strategies that do not track to a market benchmark (a hurdle rate is a target percentage for an increase in a fund's value each year). The benchmark weights will dynamically change over time based on the movement of each fund along the glide path.

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ruralavalon
Posts: 13751
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Location: Illinois

Re: 401K fund allocation advice

Post by ruralavalon » Wed Aug 22, 2018 9:09 am

dpnsubscribe wrote:
Tue Aug 14, 2018 10:19 pm
Please suggest best fund allocation for my situation.
Age: 42, Married
dpnsubscribe wrote:
Tue Aug 14, 2018 10:50 pm
PFInterest wrote:
Tue Aug 14, 2018 10:29 pm
You do know you need to provide us your AA info right?
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 30% of stocks

Thanks
Is the 401k your only account? Do you have any other accounts, like IRAs? It is often better coordinate investments across all accounts, in other words treat all accounts together as a single unified portfolio, rather than view each account separately. Select just one or two of the better funds (most diversified + lower expense ratio) in the work-based account (401k, 403b, 457, TSP etc.), where the choices offered are limited. Then complete the rest of the asset allocation using the nearly unlimited or choices available in a taxable account or any IRAs. This approach lets you avoid having to use sub-par funds often found in work-based accounts like 401ks.

The INTL COMPANY INDEX fund, ER 0.09%, in your 401k is an MSCI EAFE index fund, and omits emerging markets. The EMERGING MARKETS fund offered in your 401k has a high expense ratio, ER = 0.98%, which is too high to consider using in my opinion. Low expense ratios are critical to long-term investing performance. Seemingly small annual fees have a large cumulative impact over time. Here is a calculator you could use to estimate the impact of investing expenses. Bankrate.com, "Mutual fund fees calculator".

Also, low expense ratios are the best predictor of future performance. Morningstar, 8/9/10 . “If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.” “Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.”

"The expense ratio is the most proven predictor of future fund returns." "There are many other things to consider, but investors should make expense ratios their first or second screen." Morningstar, 5/5/18.

If you have an IRA, then you could buy a total international stock index fund or an emerging markets index fund in your IRA.

What is the index used by " SMALL CAP EQTY INDEX, ER 0.03%"?

What is the index used by " US BOND INDEX FUND, ER 0.04%"?
Is it the Bloomberg Barclays U.S. Aggregate Bond Index?

. . . . .

If the 401k is your only account, then you could use these funds:
1) 50%, US LARGE CO INDEX (S&P 500 index fund), ER 0.02%
2) 20%, INTL COMPANY INDEX (MSCI EAFE index fund) ER 0.09%
3) 30%, US BOND INDEX FUND, ER 0.04%

In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

For domestic stocks I suggest using a total stock market index fund where available; otherwise an S&P 500 index fund is good enough by itself for domestic stocks. "In a 401(k) plan with limited choices one might very well opt for an S&P 500 index fund to serve as the domestic stock component of a three-fund portfolio." Wiki article, Three-fund portfolio, "Other considerations".

An S&P 500 index fund covers 81% of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies, and in the 26 years since the creation of the first total stock market index fund the total return of the two types of funds has been almost identical. Morningstar, "growth of $10k" graph, VTSAX vs VFIAX. In the first 10 years the S&P 500 fund did better, in the last 10 years the total market fund did better, and over the 26 years the total market fund gave a little more return (0.11% per year), but at the cost of a little more volatility (risk): nisiprius post, in the forum discussion "Exchanging the S&P 500 for the TSM". See also Allan Roth, CBS Moneywatch, "John C. Bogle on the S&P 500 vs. the Total Stock Market". So it seems that adding a little in mid/small cap stocks trying to mimic the holdings of a total stock market fund has historically made little difference in performance.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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