help with picking 401k bond fund

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Topic Author
ishkadetto
Posts: 63
Joined: Thu May 24, 2018 2:49 pm
Location: California, USA

help with picking 401k bond fund

Post by ishkadetto »

Just a simple quick question. If this was your 401k, which fund would you pick for bond allocation and why?

Right now the 401k is all stock [500 Index Fund JFIVX with an ER of 1.08%] and I'm sitting on cash at the bank, so I think my goal should be to swap the 401k into bonds and buy stock in taxable with the cash.

Available Funds (only listing ones containing anything fixed-income-like):
American Century in Retirement (ATTIX) 1.46%
Strategic Income Opp Fund (JESNX) 1.28%
John Hancock Bond Fund (JHBSX) 1.23%
Vanguard Short-Term Federal (VSGDX) 1.14%
Money Market Fund (JHOXX) 1.11%

I think that the viable ones are John Hancock Bond Fund (JHBSX) and/or Vanguard Short-Term Federal (VSGDX). Pros/Cons?
These options aren't bad enough to warrant leaving the 401k in the 500 Index Fund and buying bonds in taxable with the cash, right? (marginal rate: federal 24% state 9.3%)

Thank you very much in advance for any insight!
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: help with picking 401k bond fund

Post by PFInterest »

ew. no its still useful to get the tax break. can also consider ibonds in taxable to at least help.
yes prob the john hancock, i dont know if a short term bond fund can even overcome 1.1% ER.
make sure you mention the words lawsuit to your HR......bleh.
rkhusky
Posts: 10193
Joined: Thu Aug 18, 2011 8:09 pm

Re: help with picking 401k bond fund

Post by rkhusky »

Is the S&P 500 fund the lowest ER stock fund? Or balanced fund, like a target date fund?

Hopefully, you are maxing an IRA before investing in taxable.

JHBSX is on the risky side of the bond funds, with an average rating of BBB. You might want to mix in some VSGDX or dial down the stock allocation a bit.
Topic Author
ishkadetto
Posts: 63
Joined: Thu May 24, 2018 2:49 pm
Location: California, USA

Re: help with picking 401k bond fund

Post by ishkadetto »

PFInterest wrote: Fri Aug 31, 2018 7:09 am i dont know if a short term bond fund can even overcome 1.1% ER.
make sure you mention the words lawsuit to your HR......bleh.
I know, the ER's are horrible :(
They are the effective ER, for example John Hancock is charging 1.04% no matter what the fund and the Vanguard ST Federal fund is 0.10% = a total of 1.14% ER.

Is the 1.04% John Hancock fee very unusual? It's a small business that just started offering a 401k with 4% match two years ago, so I think I have just assumed they were charging so much because it's a small account (under a million in total funds per the employer yearly statement, if I remember correctly it's even under half a million).
Topic Author
ishkadetto
Posts: 63
Joined: Thu May 24, 2018 2:49 pm
Location: California, USA

Re: help with picking 401k bond fund

Post by ishkadetto »

rkhusky wrote: Fri Aug 31, 2018 7:16 am Is the S&P 500 fund the lowest ER stock fund? Or balanced fund, like a target date fund?

Hopefully, you are maxing an IRA before investing in taxable.

JHBSX is on the risky side of the bond funds, with an average rating of BBB. You might want to mix in some VSGDX or dial down the stock allocation a bit.
Yes, the S&P is the lowest ER of anything in there. Some are as high as 1.76%. Target funds are all about the same as the American Retirement one. It's the 1.04% fee from John Hancock that's making them all so extra terrible.

I max out Roth (5.5k/year) and 401k (18.5k/year) then have the extra left over for taxable.
MnD
Posts: 4608
Joined: Mon Jan 14, 2008 12:41 pm

Re: help with picking 401k bond fund

Post by MnD »

ishkadetto wrote: Fri Aug 31, 2018 9:02 am
PFInterest wrote: Fri Aug 31, 2018 7:09 am i dont know if a short term bond fund can even overcome 1.1% ER.
make sure you mention the words lawsuit to your HR......bleh.
I know, the ER's are horrible :(
They are the effective ER, for example John Hancock is charging 1.04% no matter what the fund and the Vanguard ST Federal fund is 0.10% = a total of 1.14% ER.

Is the 1.04% John Hancock fee very unusual? It's a small business that just started offering a 401k with 4% match two years ago, so I think I have just assumed they were charging so much because it's a small account (under a million in total funds per the employer yearly statement, if I remember correctly it's even under half a million).
High but not unusual for a micro-plan that your employer is apparently not willing to subsidize beyond the 4% match.
DW is in a $20M plan with a 4% match that charges around .33% on everyone in addition to the fund fees.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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