Swap Fidelity Total International Funds?

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Swap Fidelity Total International Funds?

Post by JimmyD » Thu Feb 13, 2020 7:45 am

I've noticed that my cash position is creeping higher than I'd like it to be and as best as I can tell, it's due to a growing cash position in my holding of Fidelity Total International Index Fund (FTIHX) which currently holds nearly 6% in cash and has a .06% expense ratio.

This holding is in my 401k via BrokerageLink, so I could swap it for Fidelity Zero International Index Fund (FZILX) without tax consequence. Doing so would help to reduce my cash holding as that fund holds only .04% in cash and would save me a bit on the expense side also being that it obviously has a 0% expense ratio.

Any downside to performing this exchange and continuing to use FZILX in the future? Again, my primary motivation is to limit the amount of cash I hold in "non-cash" funds, if that makes sense.

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Re: Swap Fidelity Total International Funds?

Post by student » Thu Feb 13, 2020 7:53 am

According to https://fundresearch.fidelity.com/mutua ... =sq-NavBar it has 5.65% in cash but also 5.58% in futures etc, so I think it is essentially invested. If you still want to switch, I do not see any issues.

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Re: Swap Fidelity Total International Funds?

Post by AlohaJoe » Thu Feb 13, 2020 7:59 am

As student says, you're not counting your cash position correctly.

The amount of cash a fund holds is (mostly) irrelevant, since they usually offset it via futures.

If you really cared (and I don't think you should) you'd need to do something like look at how much differed from the index (which by definition holds no cash and has no fees), correct that for the ER, assume the remaining drag is caused by cash and not other factors (alpha, front-running, etc), then figure out how much that tracking error means for a "virtual cash" position for your own portfolio (e.g. a 0.09% tracking error on a $200,000 position would equate to $180 of cash.)

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Re: Swap Fidelity Total International Funds?

Post by snailderby » Thu Feb 13, 2020 10:18 am

FZILX lacks small caps compared to FTIHX. But I don't think you can go wrong with either fund in a 401(k).

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Re: Swap Fidelity Total International Funds?

Post by BroIceCream » Thu Feb 13, 2020 1:04 pm

I use FSPSX. ER=0.035%, 2% turnover, and much less cash. The one 'downside' is it is a bit less diverse than FTIHX (FSPSX only has ~900 stocks). I use other funds to add Intl small cap exposure.

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Re: Swap Fidelity Total International Funds?

Post by whodidntante » Thu Feb 13, 2020 1:36 pm

If this bothers you, consider ETFs instead. ETFs can operate with razor thin cash margins because they do not need to trade to meet redemptions.

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