401K moving from LinkedIn plan to Microsoft plan: Asking for Fidelity funds for 3-fund portfolio + SCV tilt

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ThisJustIn
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401K moving from LinkedIn plan to Microsoft plan: Asking for Fidelity funds for 3-fund portfolio + SCV tilt

Post by ThisJustIn » Sat Aug 01, 2020 6:34 pm

My company, LinkedIn, had its own 401K plan in Fidelity with a select set of funds, and I used BrokerageLink account to buy accounts outside of that plan. Then, at the beginning of July, LinkedIn switched to Microsoft 401K plan (parent company) (also in Fidelity), with a different fund selection in 401K plan.

In both of them, I devised a 3-fund portfolio with small-cap-value fund tilt.

This was my fund selection in LinkedIn 401K plan + BrokerageLink:
1) FXAIX: Fidelity500 index fund (proxy for US total stock market fund ) (in 401K plan)
2) VTSNX: Vanguard Total International stock market fund (in 401K plan)
3) VBTIX: Vanguard Total Market Bond index fund (in 401K plan)
4) VSIAX: Vanguard Small-cap Value index fund (in BrokerageLink account, no fees, because I only do automatic investment, and no separate buys)

I devised the same 3-fund portfolio with small-cap-value fund tilt in Microsoft 401K plan + BrokerageLink as follows:
1) Vanguard Institutional S&P 500 Index Trust (as US stock fund) (ER: 0.011%) (in 401K plan)
2) FTIHX (Fidelity Total International Index Fund) (as International stock fund) (ER: 0.06%) (in BrokerageLink account)
3) FXNAX (Fidelity US Bond Index Fund) (As Bond fund) (ER: 0.025%) (in BrokerageLink account)
4) FISVX (Fidelity Small Cap Value Index Fund) (this is a new fund) (ER: 0.05%) (in BrokerageLink account) (I moved away from VSIAX in BrokerageLink, to prevent any extra fees ($75 per trade) if I rebalance using SCV fund (which I never made so far, intentionally)).

Is this a good mapping from 3-fund portfolio + SCV in LinkedIn 401K plan to Microsoft 401K plan? Any suggestions on the fidelity funds in Microsoft 401K fund selections above? I also checked Bogleheads wiki here for Fidelity fund selection for devising 3-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio .
1) For US stock fund it recommends FZROX or FSKAX (I use Vanguard Institutional S&P 500 Index Trust),
2) For International stock fund it recommends FZILX and FTIHX (I selected FTIHX),
3) For Bond fund it recommends FXNAX (which is what I selected).

Do you have any suggestions in these fund selections in my new 401K plan for a 3-fund portfolio + SCV tilt?

sycamore
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Joined: Tue May 08, 2018 12:06 pm

Re: 401K moving from LinkedIn plan to Microsoft plan: Asking for Fidelity funds for 3-fund portfolio + SCV tilt

Post by sycamore » Sat Aug 01, 2020 6:56 pm

ThisJustIn,

The funds you're getting are passive index funds with very low expense ratios - they'll do the job just fine. The differences between Vanguard and Fidelity index funds you're comparing are negligible -- any ER difference is tiny, Vanguard funds generally return more of "securities lending" income to the investor, etc. Some people will argue about these differences are but that's really just the old "how many angels can dance on the head of a pin".

You mentioned the wiki article suggests using FZROX or FSKAX. That's because the 3-fund portfolio uses a "Total" stock market fund. You're intentionally using separate large and small cap funds so that you can get small-cap exposure, so it makes sense that you picked an S&P 500 Fund for the large cap. Technically you don't have a 3-fund portfolio but it's more than good enough. Congrats!

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