When is the best time to exchange a "not so good" fund in a 401K account?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
sylph
Posts: 4
Joined: Fri Jul 12, 2019 10:02 am

When is the best time to exchange a "not so good" fund in a 401K account?

Post by sylph » Wed Oct 09, 2019 3:24 pm

When is the best time to exchange a "not so good" fund in a 401K account? Should I wait for the dividend or sell when prices are high right before dividend? Or is the answer "doesn't matter" since I am looking for long term growth?

A liitle background here:
Age :26
Account type: ROTH 401K
Total amount in account: ~$25K
Funds to exchange : PGWAX (~$10K) OEGNX(~$5K)
Fund to buy: BSPIX (This is the only SP500 fund offered whose expense ratio is resonable )

Earlier in the year I thought it's good to have diversification by having some large growth fund(PGWAX) and mid cap fund (OEGNX) in the portfolio. Now I have realized they are crappy funds which doesn't even fair with the market and has expense ratio >1%.

Looking for what every one thinks. Also one senario, what if the value of all funds were mulitplied by 10. Will you tackle the situation differently then?

Thanks in advance !

-we all learn from our mistakes

Silk McCue
Posts: 3096
Joined: Thu Feb 25, 2016 7:11 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by Silk McCue » Wed Oct 09, 2019 3:35 pm

Welcome to Bogleheads!

Tomorrow is a good day to do so.

Dividends have no impact as the fund price drops immediately when the dividend is paid by basically the same amount per share as the dividend. Net zero.

Cheers

anon_investor
Posts: 348
Joined: Mon Jun 03, 2019 1:43 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by anon_investor » Wed Oct 09, 2019 3:38 pm

As you put it, it "doesn't matter" since your are looking for long term growth.

Dividends lower the overall value of each share by the amount of the dividend after they are distributed, so it is no real "gain" by waiting for them.

You are lucky that it is within a Roth 401k, so no tax issues created by exchanging funds. Do it tomorrow!

retiredjg
Posts: 37804
Joined: Thu Jan 10, 2008 12:56 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by retiredjg » Wed Oct 09, 2019 3:41 pm

Do it today.

zlandar
Posts: 118
Joined: Wed Apr 10, 2019 8:51 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by zlandar » Wed Oct 09, 2019 3:41 pm

ASAP.

See if there are low cost index international and bond funds to make your own 3 fund portfolio.

Topic Author
sylph
Posts: 4
Joined: Fri Jul 12, 2019 10:02 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by sylph » Wed Oct 09, 2019 3:52 pm

Thank you for all the answers.

Unfortunately, the bond funds offered comes with load of 4.5% and and internation fund offered has load of 5.75%!!.
My plan is to open a ROTH IRA and diversify there.

This group is awesome :sharebeer

User avatar
Stinky
Posts: 1971
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by Stinky » Wed Oct 09, 2019 4:05 pm

sylph wrote:
Wed Oct 09, 2019 3:24 pm

-we all learn from our mistakes
Welcome to the Forum!

Exchange your fund tomorrow.

And to your point about mistakes - we’ve all made them. You’re not alone.
It's a GREAT day to be alive - Travis Tritt

User avatar
Brianmcg321
Posts: 164
Joined: Mon Jul 15, 2019 8:23 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by Brianmcg321 » Wed Oct 09, 2019 4:10 pm

Can you go back in time and do it last year? If not then today would be good. :beer
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

User avatar
goingup
Posts: 3632
Joined: Tue Jan 26, 2010 1:02 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by goingup » Wed Oct 09, 2019 4:55 pm

sylph wrote:
Wed Oct 09, 2019 3:52 pm
Unfortunately, the bond funds offered comes with load of 4.5% and and internation fund offered has load of 5.75%!!.
Might doublecheck this. Most 401K plans have loads waived. It's rare we ever hear that loads are levied in a 401K plan.

chevca
Posts: 2753
Joined: Wed Jul 26, 2017 11:22 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by chevca » Wed Oct 09, 2019 5:00 pm

Well, the market is already closed for those saying today. :happy But, tomorrow sounds good.

I'm sure they meant get online and make the switch now/today and it will process tomorrow. Just couldn't resist. :happy

Topic Author
sylph
Posts: 4
Joined: Fri Jul 12, 2019 10:02 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by sylph » Wed Oct 09, 2019 5:12 pm

goingup wrote:
Wed Oct 09, 2019 4:55 pm
sylph wrote:
Wed Oct 09, 2019 3:52 pm
Unfortunately, the bond funds offered comes with load of 4.5% and and internation fund offered has load of 5.75%!!.
Might doublecheck this. Most 401K plans have loads waived. It's rare we ever hear that loads are levied in a 401K plan.
I will check with the provider. Will you recommend if for bonds expense ratio is ~ 0.6% to 0.8% ?
The two bond options are MIAAX(0.8%) and MRBFX(0.68%).
and the two international funds are IVVYX(1.18%) and HEMZX(1.58%)

Trader Joe
Posts: 1096
Joined: Fri Apr 25, 2014 6:38 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by Trader Joe » Wed Oct 09, 2019 5:12 pm

sylph wrote:
Wed Oct 09, 2019 3:24 pm
When is the best time to exchange a "not so good" fund in a 401K account? Should I wait for the dividend or sell when prices are high right before dividend? Or is the answer "doesn't matter" since I am looking for long term growth?

A liitle background here:
Age :26
Account type: ROTH 401K
Total amount in account: ~$25K
Funds to exchange : PGWAX (~$10K) OEGNX(~$5K)
Fund to buy: BSPIX (This is the only SP500 fund offered whose expense ratio is resonable )

Earlier in the year I thought it's good to have diversification by having some large growth fund(PGWAX) and mid cap fund (OEGNX) in the portfolio. Now I have realized they are crappy funds which doesn't even fair with the market and has expense ratio >1%.

Looking for what every one thinks. Also one senario, what if the value of all funds were mulitplied by 10. Will you tackle the situation differently then?

Thanks in advance !

-we all learn from our mistakes
Right now is the right time.

Topic Author
sylph
Posts: 4
Joined: Fri Jul 12, 2019 10:02 am

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by sylph » Wed Oct 09, 2019 5:12 pm

chevca wrote:
Wed Oct 09, 2019 5:00 pm
Well, the market is already closed for those saying today. :happy But, tomorrow sounds good.

I'm sure they meant get online and make the switch now/today and it will process tomorrow. Just couldn't resist. :happy
Already placed an order to be executed tomorrow :D

retired@50
Posts: 179
Joined: Tue Oct 01, 2019 2:36 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by retired@50 » Wed Oct 09, 2019 7:18 pm

sylph wrote:
Wed Oct 09, 2019 5:12 pm
goingup wrote:
Wed Oct 09, 2019 4:55 pm
sylph wrote:
Wed Oct 09, 2019 3:52 pm
Unfortunately, the bond funds offered comes with load of 4.5% and and internation fund offered has load of 5.75%!!.
Might doublecheck this. Most 401K plans have loads waived. It's rare we ever hear that loads are levied in a 401K plan.
I will check with the provider. Will you recommend if for bonds expense ratio is ~ 0.6% to 0.8% ?
The two bond options are MIAAX(0.8%) and MRBFX(0.68%).
and the two international funds are IVVYX(1.18%) and HEMZX(1.58%)
With bond fund choices like the ones you mention above, I'd avoid them at your age. (26) This may not fit with your risk tolerance, but the expense ratios you mention are obscene. I'd talk to someone in Human Resources about the offerings in your 401k plan and ask that a bond index fund (expense ratio should be below 0.20%) be included. These kinds of shabby offerings in 401k plans are putting too many workers in an uncomfortable position. Regards,

User avatar
grabiner
Advisory Board
Posts: 25106
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by grabiner » Thu Oct 10, 2019 9:03 pm

retired@50 wrote:
Wed Oct 09, 2019 7:18 pm
sylph wrote:
Wed Oct 09, 2019 5:12 pm
I will check with the provider. Will you recommend if for bonds expense ratio is ~ 0.6% to 0.8% ?
The two bond options are MIAAX(0.8%) and MRBFX(0.68%).
and the two international funds are IVVYX(1.18%) and HEMZX(1.58%)
With bond fund choices like the ones you mention above, I'd avoid them at your age. (26) This may not fit with your risk tolerance, but the expense ratios you mention are obscene.
You can also hold a bond fund in your IRA. Controlling risk by holding the appropriate amount of bonds is more important than getting the optimal US/foreign split, so I would prioritize a bond fund in the IRA if your IRA isn't large enough for both.

And if you can't afford to max out both an IRA and the 401(k), put enough into the 401(k) to get the full employer match, then max out the IRA in preference to putting any more money in the 401(k).
Wiki David Grabiner

miket29
Posts: 131
Joined: Tue Jun 20, 2017 9:07 pm

Re: When is the best time to exchange a "not so good" fund in a 401K account?

Post by miket29 » Thu Oct 10, 2019 9:41 pm

I will check with the provider. Will you recommend if for bonds expense ratio is ~ 0.6% to 0.8% ?
The two bond options are MIAAX(0.8%) and MRBFX(0.68%).
and the two international funds are IVVYX(1.18%) and HEMZX(1.58%)
Those expense ratios are terrible. And it has a 4.25% sales charge; hopefully you don't pay that in your 401K.

At 26 you have decades to go before you retire. Markets go up, markets go down, but they should be up a LOT in 30-40 years. If you can accept the volatility then you should be 100% in stock for at least the next decade or more. Don't try to time the market, don't panic when the inevitable drop comes and sell. Just keep saving like you have been and ignore the account balance. At some point, perhaps at a future employer with a better plan, you should consider holding international as well.

Post Reply