My previous employer was essentially a megacorp with a very competitive, low-fee 401k situation. My new employer is much smaller (around 200 people) and I am confronted with what appears to be a classic not-so-great 401k, in this case offered by Nationwide and with financial advisory service by Raymond James.
I believe it's probably worth it to just hold my nose and continue to contribute the full $18,500 to the plan each year. I have a 4% match, and beyond that the tax benefits are still significant. So, what I'm trying to determine is which funds to invest in to meet my asset allocation goals as cheaply as possible.
My asset allocation is 75% stock / 21% bonds / 4% cash. For my stock allocation, I seek to hold U.S. and international equities at roughly market capitalization. Right now I hold these equities in the following places:
- U.S. Equities: mostly in a taxable account, Roth IRA, and Traditional IRA, with a little bit in the old company 401k.
- International Equities: mostly in my old company 401k
- Bonds: in my old company 401k
- Cash: in my taxable account
What I'm scratching my head over a bit is how best to get close to VTSAX in the new 401k. Listed below are my options. In my pamphlet, each fund shows a Net AMC / Asset Free in addition to the Net Expense Ratio. In another column it adds these together to show the total annual operating expenses of each fund as a percent. I've shown the total annual expenses for each fund and I've included only the options where it is 1% or less.
In a separate place in my pamphlet it discloses that our Raymond James Fin Serv Advisors will also be charging us a 0.25% annual "investment manager fee", which I assume is on top of the fees I'm listing below. Pity I can't opt out of their services.
NW SmCap Indx R6 (GMRIX): 0.86%
NW MdCap Mkt Indx R6 (GMXIX): 0.87%
Vngrd MdCap Gr Indx Inv (VMGIX): 0.79%
Vngrd MdCap Val Indx Adml (VMVAX): 0.67%
Clvrt Soc Indx I (CISIX): 0.79%
NW S P 500 Indx R6 (GRMIX): 0.77%
Vngrd Eq Inc Adml (VEIRX): 0.77%
Vngrd Val Indx Adml (VVIAX): 0.66%
Variety of Vanguard Target Retirement Funds (2020-2060) at 0.74% - 0.76%
Vngrd Trgt Rtrmt Inc (VTINX): 0.73%
DFA Intmd Govt FxdInc Inst (DFIGX): 0.72%
Here are some options I'm considering.
I'm thinking the simplest "close enough" option for now might be just to invest entirely in GRMIX, which is Nationwide's S&P 500 index.
Another option I am considering is trying to put together a mix of large, small, and mid-cap funds to try to simulate a whole market fund. For
example I could put together something with the Nationwide options like:
- 75% GRMIX (Large-cap)
- 20% GMXIX (Mid-cap)
- 5% GMRIX (Small-cap)
The cheapest options available are VVIAX and VMVAX, both Vanguard value funds at 0.66% and 0.67%. I'm not really interested in tilting, but on the other hand a minor value tilt probably wouldn't move the needle much. I could do, say, 75% VVIAX and 25% VMVAX and call it a day.
Thoughts? Thanks for your time in looking at this!