Company 401K Fund Change

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iamthelaw
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Joined: Fri Jan 12, 2018 8:11 pm

Company 401K Fund Change

Post by iamthelaw » Fri Jan 12, 2018 8:34 pm

Hi bogleheads,

I am new to investing so I recently began paying closer attention to my company 401K with Fidelity. I am maxing out my match and on plan to contributing the limit for 2018. I just received an automated notification regarding a fund change:
The administrator of the [COMPANY] Retirement Savings Plan (the “Plan”) periodically reviews the Plan to make sure it continues to satisfy the requirements of applicable Plan terms and law. Among the things considered are the range of investment options available through the Plan, investment option performance, investment manager changes, and adherence to the stated investment option objectives. As a result of a recent review, the Plan administrator has decided to replace the Fidelity Low-Priced Stock Fund - Class K with the Transamerica Mid Cap Value Opportunities I fund.
Fidelity Low-Priced Stock Fund - Class K = .58% expense ratio
Transamerica Mid Cap Value Opportunities I = .86% expense ratio

I understand low-cost ratios is the way to go, but I am not sure why the change is being made and if it is something I should keep. What are the steps I should take to review this change/should I consider a different fund?

Thank you in advance!

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David Jay
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Re: Company 401K Fund Change

Post by David Jay » Fri Jan 12, 2018 10:49 pm

Welcome to the forum!

It would help if you could list the funds available in your 401k and the expense ratio of each fund. Then we can look at your available choices and make recommendations.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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David Jay
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Re: Company 401K Fund Change

Post by David Jay » Fri Jan 12, 2018 11:00 pm

While you are collecting the 401K information, here are the kind of portfolios that we recommend at BH: Simple portfolios using broad-based index funds (from the BH Wiki): https://www.bogleheads.org/wiki/Lazy_portfolios
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

iamthelaw
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Joined: Fri Jan 12, 2018 8:11 pm

Re: Company 401K Fund Change

Post by iamthelaw » Sat Jan 13, 2018 1:40 am

Thank you, David! For some reason, I thought the notification was regarding the 401K...

So my 401K is currently 100% invested in VANG INST TR 2050 (VTRLX). Options are:
  • FID 500 INDEX INST (FXSIX)02/17/1988 - 0.03%
    FID CONTRAFUND K (FCNKX)05/17/1967- 0.58%
    MAINSTAY LG CAP GR I (MLAIX)07/03/1995 - 0.75%
    TRP INST LG CAP VAL (TILCX)03/31/2000 - 0.57%
    AMG TS MID CAP GTH Z (TMDIX)03/04/2005 - 0.98%
    FID EXT MKT IDX PR (FSEVX)11/05/1997 - 0.07%
    FID LOW PRICED STK K (FLPKX)12/27/1989 - 0.58%
    CONESTOGA SM CAP IS (CCALX)10/01/2002 - 1.10%
    GS SM CAP VALUE INST (GSSIX)10/22/1992 - 0.97%
    DODGE & COX INTL STK (DODFX)05/01/2001 - 0.64%
    FID DIVERSIFD INTL K (FDIKX)12/27/1991 - 0.82%
    FID INTL INDEX INS (FSPNX)11/05/1997 - 0.05%
    VANG INST TR 2015 (VITVX)06/26/2015 - 0.09%
    VANG INST TR 2020 (VITWX)06/26/2015 - 0.09%
    VANG INST TR 2025 (VRIVX)06/26/2015 - 0.09%
    VANG INST TR 2030 (VTTWX)06/26/2015 - 0.09%
    VANG INST TR 2035 (VITFX)06/26/2015 - 0.09%
    VANG INST TR 2040 (VIRSX)06/26/2015 - 0.09%
    VANG INST TR 2045 (VITLX)06/26/2015 - 0.09%
     VANG INST TR 2050 (VTRLX)06/26/2015 - 0.09%
    VANG INST TR 2055 (VIVLX)06/26/2015 - 0.09%
    VANG INST TR 2060 (VILVX)06/26/2015 - 0.09%
    VANG INST TR 2065 (VSXFX)07/12/2017 - 0.09%
    VANG INST TR INCOME (VITRX)06/26/2015 - 0.09%
    LS CORE PL FXINC C04/04/2012 - 0.35%
    VANG TOT BD MKT INST (VBTIX)12/11/1986 - 0.04%
I have several follow-up questions:
  • Which of these lazy portfolios should I consider?
  • I will be creating a Vanguard account for roth + investment accounts :D, am I tied to Fidelity since my company is using them for the 401k?
  • After I decide on the portfolio, how am I supposed to know when to rebalance it?
Thank you!

dunkmachine
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Joined: Sat Jan 06, 2018 12:48 pm

Re: Company 401K Fund Change

Post by dunkmachine » Sat Jan 13, 2018 10:31 am

Looks like you have a pretty good selections.

First would be decide on your stock/bond split. Then decide percentage of domestic to international stocks (FSPNX).

81% FXSIX/19% FSEVX will approximate Vanguard Total Stock Market.

As an example, 80% stocks (20% bonds) with 20% international, allocation will look like this:
51.84% FID 500 INDEX INST (FXSIX)
12.16% FID EXT MKT IDX PR (FSEVX)
16% FID INTL INDEX INS (FSPNX)
20% VANG TOT BD MKT INST (VBTIX)

You're only tied to Fidelity for your 401(k) (while you're employed) but free to open a Roth or taxable accounts with whoever.

Multiple methods for rebalancing. Time based or threshold/boundary. The main thing to remember is the goal is to sell high and buy low to get your AA back to your desirable range.

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David Jay
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Re: Company 401K Fund Change

Post by David Jay » Sat Jan 13, 2018 10:45 am

You have so many great choices, I would "philosophically" refuse to use any fund with an ER over .5 when you have so many other great, low cost choices. So I would not hold either Fidelity Low Price or Transamerica Mid Cap Value from your first post.

The 4 funds that "dunkmachine" mentioned above are great! You can adjust the holdings to achieve your preferred allocation between US, Intl. and bonds. The Wiki has a good section on asset allocation, I also like this Vanguard resource (look at the "worst year ever" to see how much drop you could experience): https://www.vanguard.com/us/insights/sa ... llocations
Last edited by David Jay on Sat Jan 13, 2018 11:24 am, edited 2 times in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

JW-Retired
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Re: Company 401K Fund Change

Post by JW-Retired » Sat Jan 13, 2018 11:08 am

iamthelaw wrote:
Sat Jan 13, 2018 1:40 am
So my 401K is currently 100% invested in VANG INST TR 2050 (VTRLX). (ER=0.09%)
............................
After I decide on the portfolio, how am I supposed to know when to rebalance it?
I would stick with your first pick for a while. It covers the market at low cost and re-balances on it's own.

If you change your mind after some months or years, then it might take you 5 minutes and a few mouse clicks to change it to something different.
JW
Welcome to the forum!
Retired at Last

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ruralavalon
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Re: Company 401K Fund Change

Post by ruralavalon » Sat Jan 13, 2018 11:12 am

I would not use either Fidelity Low-Priced Stock Fund, ER 0.58% or TransAmerica Mid Cap Value Fund, ER 0.86%.

I think you have made a good choice in Vanguard Institutional Trust Target Retirement 2050 (VTRLX) ER 0.09%, so you could just use that by itself.

If you want to switch to separate funds, then in your 401k I suggest using:
Fidelity 500 Index Fund Institutional (FXSIX) ER 0.035%
Dodge & Cox International Stock Fund (DODFX) ER 0.64%; and
Vanguard Total Bond Market Index Fund Admiral Institutional (VBITX) ER 0.04%
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ccieemeritus
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Joined: Thu Mar 06, 2014 10:43 pm

Re: Company 401K Fund Change

Post by ccieemeritus » Sat Jan 13, 2018 11:26 am

It looks like the fund you use is not being changed. So this does not affect you, other than giving you a new (bad with high ER) fund to choose from.

I don’t think any action is needed on your part.

iamthelaw
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Joined: Fri Jan 12, 2018 8:11 pm

Re: Company 401K Fund Change

Post by iamthelaw » Sat Jan 13, 2018 2:20 pm

Wow, thank you all! Okay, I will consider multiple fund portfolios but will keep current fund for now. Cheers!

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