Structuring 401k - MorningStar rating matters?

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sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Structuring 401k - MorningStar rating matters?

Post by sman09 » Tue Jun 12, 2018 11:54 pm

I'd like to cut down on the expense in the 401K plan at Fidelity that i am currently in through my employer. The expense ratio is above 0.6% and I see that there is a chance of constructing something the equivalent of 3/4 fund portfolio using the assets available.

I plan on listing the investment alternatives available here on the forum to get advice on which ones i could go with. To do so, I applied a filter in searching for available alternative investment options - the filter condition was "have a morning star rating of at least 4, have expense ratio <= 0.5"

In doing so, i noticed that Vanguard Total Bond Market Index fund is not displaying - as it has a Morning Star rating of 3. This makes me wonder whether i should even set any Morning star score criteria at all in looking at available funds. Any thoughts?

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Structuring 401k - MorningStar rating matters?

Post by MotoTrojan » Tue Jun 12, 2018 11:58 pm

Would never use that metric. Post options and desired AA and you’ll get what you need.

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 12:00 am

Thank you very much!
I will shortly post the available options.

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 12:13 am

sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.

As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!

Nate79
Posts: 3708
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Structuring 401k - MorningStar rating matters?

Post by Nate79 » Wed Jun 13, 2018 12:36 am

sman09 wrote:
Wed Jun 13, 2018 12:13 am
sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.

As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!
Here is the wiki on constructing a 3 fund portfolio. There is also a Fidelity section you should check out.


https://www.bogleheads.org/wiki/Three-fund_portfolio

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 1:05 am

Nate79 wrote:
Wed Jun 13, 2018 12:36 am
sman09 wrote:
Wed Jun 13, 2018 12:13 am
sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.

As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!
Here is the wiki on constructing a 3 fund portfolio. There is also a Fidelity section you should check out.


https://www.bogleheads.org/wiki/Three-fund_portfolio
Thank you Nate79 for the pointer. I'm familiar with the webpage and that is also how i even know of the possibility of having a 3/4 fund portfolio.

i am sorry for not being clear with my query - here is some additional information

I see that i can construct the Fidelity funds based equivalent of the Vanguard-3/4 fund portfolio. i was trying to seek member inputs as to whether i may also be able to use any of the low cost Vanguard funds available through my 401k plan, given that Vanguard is the highly regarded firm here on BH. Reading several posts and some of the freely available resources including book recommended on BH, i would actually prefer that my money be with Vanguard instead of firms which spend on marketing.

TwstdSista
Posts: 987
Joined: Thu Nov 16, 2017 4:03 am

Re: Structuring 401k - MorningStar rating matters?

Post by TwstdSista » Wed Jun 13, 2018 4:39 am

The three fund portfolio with your options available would consist of:
Fidelity® Total Market Index Fund - 0.035%
Fidelity® International Index Fund - 0.06%
Vanguard Total Bond Market Index Fund 0.05%

Using only Vanguard funds, you are limited to (more expensive and not a 3 fund portfolio):
Vanguard Small-Cap Index Fund Admiral 0.05%
Vanguard Real Estate Index Fund 0.12%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Total Bond Market Index Fund 0.05%

I'm at Fidelity and don't have a problem using their index funds.

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 8:40 am

TwstdSista wrote:
Wed Jun 13, 2018 4:39 am
The three fund portfolio with your options available would consist of:
Fidelity® Total Market Index Fund - 0.035%
Fidelity® International Index Fund - 0.06%
Vanguard Total Bond Market Index Fund 0.05%

Using only Vanguard funds, you are limited to (more expensive and not a 3 fund portfolio):
Vanguard Small-Cap Index Fund Admiral 0.05%
Vanguard Real Estate Index Fund 0.12%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Total Bond Market Index Fund 0.05%

I'm at Fidelity and don't have a problem using their index funds.
Thanks a lot for the suggestion and for sharing your experience using Fidelity index funds.

nolesrule
Posts: 800
Joined: Thu Feb 26, 2015 10:59 am

Re: Structuring 401k - MorningStar rating matters?

Post by nolesrule » Wed Jun 13, 2018 8:46 am

Is it just me or are there some duplicate fund types in that list making for needless complexity of choices?

Nate79
Posts: 3708
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Structuring 401k - MorningStar rating matters?

Post by Nate79 » Wed Jun 13, 2018 9:54 am

sman09 wrote:
Wed Jun 13, 2018 1:05 am
Nate79 wrote:
Wed Jun 13, 2018 12:36 am
sman09 wrote:
Wed Jun 13, 2018 12:13 am
sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.

As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!
Here is the wiki on constructing a 3 fund portfolio. There is also a Fidelity section you should check out.


https://www.bogleheads.org/wiki/Three-fund_portfolio
Thank you Nate79 for the pointer. I'm familiar with the webpage and that is also how i even know of the possibility of having a 3/4 fund portfolio.

i am sorry for not being clear with my query - here is some additional information

I see that i can construct the Fidelity funds based equivalent of the Vanguard-3/4 fund portfolio. i was trying to seek member inputs as to whether i may also be able to use any of the low cost Vanguard funds available through my 401k plan, given that Vanguard is the highly regarded firm here on BH. Reading several posts and some of the freely available resources including book recommended on BH, i would actually prefer that my money be with Vanguard instead of firms which spend on marketing.
The 3 fund Fidelity index funds (Total stock, total international, and total bond) are the lowest cost options and the best choice for a 3 fund portfolio. You have a somewhat unique 401k that you have access to some other interesting funds if you want to tilt. For example not many have a REIT fund in their 401k. Or the emerging markets fund would be another interesting tilt. The others I would look at are the 3 Vanguard active funds. I do not know much about these 3 particular funds but if you put their name in the search function you will find past threads on them and see if they are for you. Especially the Morgan fund.

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 10:19 am

Thanks a lot @Nate79 for the inputs and pointing me to those funds - i had not considered REITs or any of the other funds you had mentioned as possible candidates to consider. I will also wait for inputs from other members who may have first hand experience investing in them and in the meanwhile read the forum here to see for any prior discussion on those funds.

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 10:23 am

nolesrule wrote:
Wed Jun 13, 2018 8:46 am
Is it just me or are there some duplicate fund types in that list making for needless complexity of choices?
Thank you @nolesrule for sharing your thoughts.

There are over 150+ investment options and i have presented only those from the first page of search results with an expense ratio <=0.35 - perhaps as you say, if one looks through the entire list, there could be many more duplicate funds.

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ruralavalon
Posts: 14236
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Structuring 401k - MorningStar rating matters?

Post by ruralavalon » Wed Jun 13, 2018 11:16 am

Those are excellent funds offered in your 401k, you are fortunate.

I don't use Morningstar star ratings to select funds to use. The stars are are an indication of past performance, not future performance. An index fund most commonly will have three stars, because an index fund consistently gives the average market return.

sman09 wrote:
Wed Jun 13, 2018 12:13 am
sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.

As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

In my opinion, of the listed funds the funds to use in your 401k are:
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® U.S. Bond Index Fund - 0.045%

Fidelity® International Index Fund - 0.06% is not a total international stock index fund, it covers only stocks of larger companies, only in developed markets excluding Canada.

Fidelity® Global ex U.S. Index Fund - 0.1% is more diversified, and covers stocks of larger companies in both emerging and developed markets including Canada.

For a little better diversification look to see if your 401k plan offers Fidelity® Total International Index Fund Premium Class (FTIPX) ER 0.10%, which in addition has coverage for stocks of smaller companies.

Fidelity U.S. Bond Index Fund and Vanguard Total Bond Market Index Fund are near equivalents. You could use either fund. Both use a version of the very broadly diversified Bloomberg Barclays U.S. Aggregate Bond Index. The expense ratio difference of just 5 thousandth of a percent is tiny, and virtually meaningless.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Mors
Posts: 192
Joined: Wed Aug 16, 2017 10:06 am

Re: Structuring 401k - MorningStar rating matters?

Post by Mors » Wed Jun 13, 2018 5:12 pm

What ruralavalon said. I would just like to point out that if you want to accompany the main index portfolio with an actively managed fund, the Vanguard Wellington has great potential. It is cheap, it does not invest overly risky and has great managers that outperformed the market consistently in the past. Just make sure to keep your preferred stocks/bonds allocation. The Wellington fund holds about 2/3 in domestic stocks and 1/3 in domestic bonds. If for example you want an 90/10 stocks-bonds portfolio, 60/40 us/int stocks, you can go with

30% Wellington
35% Fidelity® Total Market Index Fund
35% Fidelity® Global ex U.S. Index Fund (or Fidelity® Total International Index Fund Premium Class)

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 6:13 pm

ruralavalon wrote:
Wed Jun 13, 2018 11:16 am
Those are excellent funds offered in your 401k, you are fortunate.

I don't use Morningstar star ratings to select funds to use. The stars are are an indication of past performance, not future performance. An index fund most commonly will have three stars, because an index fund consistently gives the average market return.

sman09 wrote:
Wed Jun 13, 2018 12:13 am
sman09 wrote:
Wed Jun 13, 2018 12:00 am
Thank you very much!
I will shortly post the available options.


As i begin compiling the list of available funds, i notice that the list is growing to close to 50 funds that have an expense ratio <=0.5

I fear posting that many funds could be distracting to members who would be willing to advice. Is there any criteria i could follow in identifying the funds available and sharing it here.

For now these are the funds i have identified with an expense ratio of 0.35 or less

Stock (expense ratio next to fund name - gross expense in bracket, if different from net expense)

Fidelity® 500 Index Fund - Institutional 0.03%
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Mid Cap Index Fund - 0.05%
Fidelity® Small Cap Index Fund - 0.05%
Vanguard Small-Cap Index Fund Admiral 0.05%
Fidelity® International Index Fund - 0.06%
Fidelity® Extended Market Index Fund - 0.07%
Fidelity® Real Estate Index Fund - 0.09%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® Four-in-One Index Fund (FFNOX) - 0.11% (0.13)
Vanguard Real Estate Index Fund 0.12%
Fidelity® Emerging Markets Index Fund - 0.13%
Vanguard Wellington™ Fund 0.17%
Vanguard Windsor™ II Fund Admiral™ 0.26%
Vanguard Morgan™ Growth Fund 0.28%
Fidelity® Nasdaq® Composite Index 0.3%

Bonds
Fidelity® U.S. Bond Index Fund - 0.045%
Fidelity® Intermediate 0.06%
Fidelity® Long-Term Treasury Bond Index 0.06%
Vanguard Total Bond Market Index Fund 0.05%
Fidelity® Short-Term Treasury Bond Index 0.06%
Fidelity® Inflation-Protected Bond - 0.09%
Vanguard Long-Term Investment-Grade 0.12%
Fidelity® Conservative Income 0.35% (0.4)

could you give me some direction before i continue compiling any further funds? or could the equivalent of a 3/4 fund portfolio be constructed using some of the above funds?


Thank you!
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

In my opinion, of the listed funds the funds to use in your 401k are:
Fidelity® Total Market Index Fund - 0.035%
Fidelity® Global ex U.S. Index Fund - 0.1%
Fidelity® U.S. Bond Index Fund - 0.045%

Fidelity® International Index Fund - 0.06% is not a total international stock index fund, it covers only stocks of larger companies, only in developed markets excluding Canada.

Fidelity® Global ex U.S. Index Fund - 0.1% is more diversified, and covers stocks of larger companies in both emerging and developed markets including Canada.

For a little better diversification look to see if your 401k plan offers Fidelity® Total International Index Fund Premium Class (FTIPX) ER 0.10%, which in addition has coverage for stocks of smaller companies.

Fidelity U.S. Bond Index Fund and Vanguard Total Bond Market Index Fund are near equivalents. You could use either fund. Both use a version of the very broadly diversified Bloomberg Barclays U.S. Aggregate Bond Index. The expense ratio difference of just 5 thousandth of a percent is tiny, and virtually meaningless.
Thanks a lot @ruralavalon for sharing your thoughts about the funds offered in my 401k and also for educating me on the difference between Fidelity® Global ex U.S. Index Fund and Fidelity® International Index Fund - going by the name, i would have thought Fidelity® International Index Fund is the truly diversified fund that gives an international exposure.

I will keep this in mind, as i proceed
In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio".
thanks again!

sman09
Posts: 211
Joined: Fri Mar 23, 2018 12:02 am

Re: Structuring 401k - MorningStar rating matters?

Post by sman09 » Wed Jun 13, 2018 6:14 pm

Mors wrote:
Wed Jun 13, 2018 5:12 pm
What ruralavalon said. I would just like to point out that if you want to accompany the main index portfolio with an actively managed fund, the Vanguard Wellington has great potential. It is cheap, it does not invest overly risky and has great managers that outperformed the market consistently in the past. Just make sure to keep your preferred stocks/bonds allocation. The Wellington fund holds about 2/3 in domestic stocks and 1/3 in domestic bonds. If for example you want an 90/10 stocks-bonds portfolio, 60/40 us/int stocks, you can go with

30% Wellington
35% Fidelity® Total Market Index Fund
35% Fidelity® Global ex U.S. Index Fund (or Fidelity® Total International Index Fund Premium Class)
Thank you very much @Mors for adding to @ruralavalon's suggestion and also for bringing to my attention the Wellington fund - from what you say, it appears to be something i want to look in to. Also, appreciate you offering more information about the holding pattern in the fund and for suggesting a sample portfolio - i will take these in to account as i move forward.

Many thanks!

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