Help me to select 401K funds

[haripatil]

I changed employer and have below funds available in my new employers 401K plan. I want US Stocks 80%, International 10% and Bonds 10%. Although Target retirement funds seems good, I am trying for more control over allocation. Here are details of funds available. Please help me to make my desired allocation.

Vanguard Target funds Exp Ratio 0.07%

Index Funds:
Bond BlackRock US Debt Index M Exp Ratop 0.03%
Short term bond Vanguard Short-Term Inflation-Protected Securities Index Inst Exp Ratio 0.04%
Large cap equity BlackRock Russell 1000 Index M Exp Ratio 0.02%
Small Cap equity BlackRock Russell 2000 Index M Exp Ratio 0.03
International BlackRock MSCI ACWI ex-U.S. Index M Exp Ratio 0.07

Actively managed funds:
There are actively managed funds available for 3 funds portifo but all them have expense ratio for more 0.20% so trying to avoid them but here is one bond fund
BlackRock Total Return Bond Fund T Exp Ratio 0.22%

I changed employer and have below funds available in my new employers 401K plan. I want US Stocks 80%, International 10% and Bonds 10%. Although Target retirement funds seems good, I am trying for more control over allocation. Here are details of funds available. Please help me to make my desired allocation.

Vanguard Target retirement date funds Exp Ratio 0.07%

Index Funds:
Bond - BlackRock US Debt Index M Exp Ratop 0.03%
Short term bond - VTSPX - Vanguard Short-Term Inflation-Protected Securities Index Inst Exp Ratio 0.04%
Large cap equity - BlackRock Russell 1000 Index M Exp Ratio 0.02%
Small Cap equity - BlackRock Russell 2000 Index M Exp Ratio 0.03
International - BlackRock MSCI ACWI ex-U.S. Index M Exp Ratio 0.07

Actively managed funds:
There are actively managed funds available for 3 funds portifo but all them have expense ratio for more 0.20% so trying to avoid them but here is one bond fund
BlackRock Total Return Bond Fund T Exp Ratio 0.22%

I wish I could get fund sysmbol but it seems there is no simple way on my employers website and can't find with simple google

[exodusNH]

I changed employer and have below funds available in my new employers 401K plan. I want US Stocks 80%, International 10% and Bonds 10%. Although Target retirement funds seems good, I am trying for more control over allocation. Here are details of funds available. Please help me to make my desired allocation.

So you want to be 90% stocks and 10% bonds?

[akashshah]

I would personally keep things simple in a 3 fund portfolio:

80% BlackRock Russell 1000 Index M
10% BlackRock US Debt Index M
10% BlackRock MSCI ACWI ex-U.S. Index M

[lakpr]

I would super-earnestly suggest the Vanguard Target Retirement 20xx fund, for the 0.07% expense ratio. This is less than half the ER you would have to pay if you were to invest in the same fund outside of the 401k plan (IRA and taxable).

You may be able to lower the overall expense ratio by adopting a 3-fund portfolio, but behavioral mistakes or failure to respond timely might cost you more than what you save in expense ratios. The super advantage of balanced funds / blended funds / target risk funds / target date funds is that you get daily re-balancing. That is not quite possible with individual re-balancing, and if you attempt to do frequent rebalancing, you might find yourself restricted.

The reasons to adopt a 3-fund portfolio over a target date fund are:
- A considerable gap in the expense ratio if you were to adopt a 3-fund portfolio (at least 10 basis points difference being by thumb-in-the-air threshold)
- you vehemently disagree with the composition of the target date fund (I count myself in this camp; I do not want 40% of my stocks allocation to international, I want no more than 20%, that's why I adopt the 3-fund portfolio over target date fund)

If after reading this, you do decide to adopt the 3-fund portfolio, @akashshah's recommendation is spot-on.

[haripatil]

I changed employer and have below funds available in my new employers 401K plan. I want US Stocks 80%, International 10% and Bonds 10%. Although Target retirement funds seems good, I am trying for more control over allocation. Here are details of funds available. Please help me to make my desired allocation.

So you want to be 90% stocks and 10% bonds?

Yes want 90% stocks and 10% bonds

[haripatil]

I would super-earnestly suggest the Vanguard Target Retirement 20xx fund, for the 0.07% expense ratio. This is less than half the ER you would have to pay if you were to invest in the same fund outside of the 401k plan (IRA and taxable).

You may be able to lower the overall expense ratio by adopting a 3-fund portfolio, but behavioral mistakes or failure to respond timely might cost you more than what you save in expense ratios. The super advantage of balanced funds / blended funds / target risk funds / target date funds is that you get daily re-balancing. That is not quite possible with individual re-balancing, and if you attempt to do frequent rebalancing, you might find yourself restricted.

The reasons to adopt a 3-fund portfolio over a target date fund are:
- A considerable gap in the expense ratio if you were to adopt a 3-fund portfolio (at least 10 basis points difference being by thumb-in-the-air threshold)
- you vehemently disagree with the composition of the target date fund (I count myself in this camp; I do not want 40% of my stocks allocation to international, I want no more than 20%, that's why I adopt the 3-fund portfolio over target date fund)

If after reading this, you do decide to adopt the 3-fund portfolio, @akashshah's recommendation is spot-on.

Thanks for the details. My knowledge maybe wrong about target date funds but here is the reason I want to avoid them. I am near to 40 now and if I choose 2040 fund (retirement age 60) then at some point in future it will be reducing my stock% and I want to keep it more aggressive until I retire that is 20 years for now. So if I choose target date fund of 2060 then I can achieve my asset allocation? I am just concerned about asset allocation in target date funds.

[lakpr]

Yes, if you choose Target date 2060, you do get the more aggressive equity allocation that you desire. No one is going to card you and ask why you are choosing a target date not aligned with your age