Help picking funds for John Hancock 401k

[turquoisemagenta]

Hi fellow investors,

I'd like help with choosing funds in a 401k that John Hancock manages. My old allocation from the former employer was:

• Vanguard Total International Stock Index Fund Institutional (VTSNX) - 40% (expense ratio 0.09%)
  Vanguard Total Stock Market Index Fund Institutional Plus (VSMPX) - 60% (expense ratio 0.02%)

I try to keep the allocation simple and rebalance once per year. I have a long horizon until retirement, so I'm OK with equities only in my 401k. I have an emergency fund, so I'm not concerned about the volatility in my 401k.

The John Hancock funds from the new employer are much more limited in selection compared to TIAA (where my old retirement plan lives) and the expense ratios are higher (greater than 0.5%).

1. Can you please help me figure out how to replicate my old stock allocation (40% total international stock index fund and 60% total US stock index fund)? These are the funds available to me at John Hancock.

Code: Select all

| Investment Option               | Expense Ratio (%) | Morningstar Category |
|---------------------------------|-------------------|----------------------|
| Vanguard Target Ret 2065        | 0.68              | Target-date 2060+    |
| Vanguard Growth Index Fund      | 0.65              | Large Growth         |
| Vanguard Mid-Cap Growth ETF     | 0.73              | Mid-cap Growth       |
| Vanguard Mid-Cap Value ETF      | 0.73              | Mid-cap Value        |
| Vanguard Small Cap Grow Index   | 0.67              | Small Growth         |
| Vanguard Small Cap Value Index  | 0.67              | Small Value          |
| Vanguard Total Intl Stock Idx   | 0.72              | Foreign Large Blend  |
| Vanguard Value Index Fund       | 0.65              | Large Value          |

I only shared the Vanguard funds above because the other funds all had similar or even higher expense ratios or they're actively managed funds (which have higher expense ratios). The funds with the lowest expense ratios are the Vanguard Target Date Retirement fund and a John Hancock 500 Index Fund - JFIVX at 0.65%. I can include a longer list of funds if helpful but I trimmed significantly to avoid information overload in this post.

2. Would it be smarter to leave my old 401k where it lives now in TIAA due to greater fund selection and significantly lower expense ratios? (assuming no extra fees or negligible new fees that TIAA may charge now that the former employer doesn't cover administration fees for me).

Thank you in advance for your help! I did try to figure this out on my own looking at older posts like this one viewtopic.php?t=163882 but I quickly became overwhelmed. So I really appreciate any insights you have to share.

[retired@50]

Hi fellow investors,

I'd like help with choosing funds in a 401k that John Hancock manages. My old allocation from the former employer was:

• Vanguard Total International Stock Index Fund Institutional (VTSNX) - 40% (expense ratio 0.09%)
  Vanguard Total Stock Market Index Fund Institutional Plus (VSMPX) - 60% (expense ratio 0.02%)

I try to keep the allocation simple and rebalance once per year. I have a long horizon until retirement, so I'm OK with equities only in my 401k. I have an emergency fund, so I'm not concerned about the volatility in my 401k.

The John Hancock funds from the new employer are much more limited in selection compared to TIAA (where my old retirement plan lives) and the expense ratios are higher (greater than 0.5%).

1. Can you please help me figure out how to replicate my old stock allocation (40% total international stock index fund and 60% total US stock index fund)? These are the funds available to me at John Hancock.

Code: Select all

| Investment Option               | Expense Ratio (%) | Morningstar Category |
|---------------------------------|-------------------|----------------------|
| Vanguard Target Ret 2065        | 0.68              | Target-date 2060+    |
| Vanguard Growth Index Fund      | 0.65              | Large Growth         |
| Vanguard Mid-Cap Growth ETF     | 0.73              | Mid-cap Growth       |
| Vanguard Mid-Cap Value ETF      | 0.73              | Mid-cap Value        |
| Vanguard Small Cap Grow Index   | 0.67              | Small Growth         |
| Vanguard Small Cap Value Index  | 0.67              | Small Value          |
| Vanguard Total Intl Stock Idx   | 0.72              | Foreign Large Blend  |
| Vanguard Value Index Fund       | 0.65              | Large Value          |

I only shared the Vanguard funds above because the other funds all had similar or even higher expense ratios or they're actively managed funds (which have higher expense ratios). The funds with the lowest expense ratios are the Vanguard Target Date Retirement fund and a John Hancock 500 Index Fund - JFIVX at 0.65%. I can include a longer list of funds if helpful but I trimmed significantly to avoid information overload in this post.

2. Would it be smarter to leave my old 401k where it lives now in TIAA due to greater fund selection and significantly lower expense ratios? (assuming no extra fees or negligible new fees that TIAA may charge now that the former employer doesn't cover administration fees for me).

Thank you in advance for your help! I did try to figure this out on my own looking at older posts like this one viewtopic.php?t=163882 but I quickly became overwhelmed. So I really appreciate any insights you have to share.

Welcome to the forum.

1. The easiest way to keep to your roughly 60% US / 40% International stock allocation is to use the Vanguard target date retirement fund. Sure, it has a little bit in bonds, but it will hardly matter. The basic equity holdings are already in the 60% US /40% Int. area so you won't really need to re-balance.

2. I'd probably leave the old 401k as is, at least until you're certain about any fees in the new plan. On the surface, it appears the new plan is more expensive, but the question is... Are there any other fees in the old plan that you might not be aware of? Something to look into, before making a move.

Regards,

[turquoisemagenta]

@

Welcome to the forum.

1. The easiest way to keep to your roughly 60% US / 40% International stock allocation is to use the Vanguard target date retirement fund. Sure, it has a little bit in bonds, but it will hardly matter. The basic equity holdings are already in the 60% US /40% Int. area so you won't really need to re-balance.

2. I'd probably leave the old 401k as is, at least until you're certain about any fees in the new plan. On the surface, it appears the new plan is more expensive, but the question is... Are there any other fees in the old plan that you might not be aware of? Something to look into, before making a move.

Regards,

Thank you for your welcome. Long time reader, first time poster

Thanks for your confirmation. I suspected Target Date funds but didn't want to bias my question.

I appreciate your guidance and it's helpful to have an outside opinion.

[devillif311]

Ouch on those fees from John Hancock. Curious why they think excessive fees compared to competition is essential to the business other than to line the pockets of John Hancock directors...

[ruralavalon]

Welcome to the forum .

In my opinion your best choice is Vanguard Target Retirement 2065, ER 0.68%.

I suggest that you NOT rollover your old TIAA 401k into this more expensive plan.

[Beensabu]

Ouch on those fees from John Hancock. Curious why they think excessive fees compared to competition is essential to the business other than to line the pockets of John Hancock directors...

It's admin fees that the employer doesn't want to pay tacked onto fund ERs.

[retired@50]

...
The John Hancock funds from the new employer are much more limited in selection compared to TIAA (where my old retirement plan lives) and the expense ratios are higher (greater than 0.5%).
...

Thank you for your welcome. Long time reader, first time poster

Thanks for your confirmation. I suspected Target Date funds but didn't want to bias my question.

I appreciate your guidance and it's helpful to have an outside opinion.

Since this is a new employer, you will probably need to be cautious with what I'm about to mention, but here goes...

These fees you're paying (along with everyone else in your 401k plan) are not a bargain, as you know. They're certainly not the worst we've seen from some forum members.

Some people take it upon themselves to try and correct the situation. I like to think of this as helping out all your co-workers at the same time (by saving them money with their 401k investment expenses).

We have a wiki page on how to campaign for a better 401k plan, which you may or may not want to pursue, but it might be worth reading anyway, just to help you better understand what is going on.

See link: https://www.bogleheads.org/wiki/How_to_ ... 01(k)_plan

Regards,

[devillif311]

Ouch on those fees from John Hancock. Curious why they think excessive fees compared to competition is essential to the business other than to line the pockets of John Hancock directors...

It's admin fees that the employer doesn't want to pay tacked onto fund ERs.

Shows alot about the company if they transfer the cost back to the employees

[ruralavalon]

Ouch on those fees from John Hancock. Curious why they think excessive fees compared to competition is essential to the business other than to line the pockets of John Hancock directors...

It's admin fees that the employer doesn't want to pay tacked onto fund ERs.

Shows alot about the company if they transfer the cost back to the employees

It costs money to run a 401k plan, and somebody has to pay the cost.

Shows a lot more about John Hancock that the administrative fees are so excessive (around 0.60%).

[Harmanic]

Only contribute enough for the match and use a brokerage or IRA for anything more.

[retired@50]

Only contribute enough for the match and use a brokerage or IRA for anything more.

This ^^^ might be taking it a bit too far...

I'm certainly no fan of high fee 401k plans, but the expenses would have to be greater than 0.68% to make the plan not worthwhile... It may boil down to how much the OP can save anyway... No idea if the OP is contributing the maximum...?

OP,
We have a 401k wiki page that discusses plans with expensive or mediocre choices.
See link: https://www.bogleheads.org/wiki/401(k)# ... re_choices

See also: https://www.bogleheads.org/wiki/Priorit ... nvestments
The prioritizing investments page will help you decide which accounts to fund, and to what degree.

Regards,

[ruralavalon]

Only contribute enough for the match and use a brokerage or IRA for anything more.

That's too extreme, it depends on turquoisemagenta's tax bracket and the number of years they might stay with this employer.

[lakpr]

I suggest to contribute only to the S&P 500 in the current plan, or international equities fund in the current plan, and rebalance in the plan once an year.

Between the two, I would opt for contributing to international equities, since *MY* personal outlook on the international equities is relatively negative. That is, I expect that S&P 500 to outshine international equities within my lifetime (over the long run). So let the Eagles (S&P 500) fly unencumbered and let the Dogs (international equities) be saddled down with the higher fees.

[JD7]

You could look into an in service roll over. I'm debating doing that with my wife's 401k. It has similar expense ratios to yours. It's up to the company to allow it though. Her HR department said they would but I haven't tried yet.