Fidelity FIAM Index Target Date 2050 Commingled

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DoctorPhysics
Posts: 164
Joined: Sun Jun 07, 2015 12:50 pm

Fidelity FIAM Index Target Date 2050 Commingled

Post by DoctorPhysics »

I was switched out of VFIFX - Vanguard Target Date 2050 into FIAM Index Target Date 2050 Commingled Pool Class T in my 401k recently.
Not sure if they were allowed to do that without consent.

From the prospectus, it appears to be a blend of ACTIVE and PASSIVE investments.
https://institutional.fidelity.com/app/ ... 63555.html

And look at this doozy buried deep in the fine print:

"The target date products are subject to the risks associated with investing in a passively managed underlying pool in which the passively managed
underlying pools performance could be lower than an actively managed pool that shifts its portfolio assets to take advantage of market opportunities or lessen the impact of a market decline or a decline in the value of one or more issuers."

What do others think? Any experience with these types of commingled funds.
I'm tempted to now go about setting my own 3 fund myself - is that a better alternative to this fund?
000
Posts: 4818
Joined: Thu Jul 23, 2020 12:04 am

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by 000 »

Assuming reasonable expense ratios on the index components of the three funds I would rather use those than a fund with active components.
Doctor Rhythm
Posts: 793
Joined: Mon Jan 22, 2018 3:55 am

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by Doctor Rhythm »

DoctorPhysics wrote: Mon Apr 05, 2021 12:53 am I was switched out of VFIFX - Vanguard Target Date 2050 into FIAM Index Target Date 2050 Commingled Pool Class T in my 401k recently.
Not sure if they were allowed to do that without consent.

From the prospectus, it appears to be a blend of ACTIVE and PASSIVE investments.
https://institutional.fidelity.com/app/ ... 63555.html

And look at this doozy buried deep in the fine print:

"The target date products are subject to the risks associated with investing in a passively managed underlying pool in which the passively managed
underlying pools performance could be lower than an actively managed pool that shifts its portfolio assets to take advantage of market opportunities or lessen the impact of a market decline or a decline in the value of one or more issuers."

What do others think? Any experience with these types of commingled funds.
I'm tempted to now go about setting my own 3 fund myself - is that a better alternative to this fund?
The “doozy” seems like boiler plate language. Basically says what you already know if you’re a Boglehead. A passively managed fund doesn’t try to time the market, and therefore might yield better or worse returns than an active fund that does. The expense ratio is higher than I like, though not crazy high either. I’d switch to the 3-fund portfolio if the plan offers the appropriate funds to do so.

Now, I’m guessing your employer switched from Vanguard to Fidelity as their vendor/trustee — hence, you were moved from one TDF family to another. It happens. You were probably given advanced notice. Your active consent wasn’t necessary. Similar thing happened at my mega-public-university system when they reduced the number of fund choices (a good decision in my opinion). If you didn’t sell your position in an eliminated fund, they moved you into the closest remaining alternative(s).
Topic Author
DoctorPhysics
Posts: 164
Joined: Sun Jun 07, 2015 12:50 pm

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by DoctorPhysics »

Doctor Rhythm wrote: Mon Apr 05, 2021 2:34 am
DoctorPhysics wrote: Mon Apr 05, 2021 12:53 am I was switched out of VFIFX - Vanguard Target Date 2050 into FIAM Index Target Date 2050 Commingled Pool Class T in my 401k recently.
Not sure if they were allowed to do that without consent.

From the prospectus, it appears to be a blend of ACTIVE and PASSIVE investments.
https://institutional.fidelity.com/app/ ... 63555.html

And look at this doozy buried deep in the fine print:

"The target date products are subject to the risks associated with investing in a passively managed underlying pool in which the passively managed
underlying pools performance could be lower than an actively managed pool that shifts its portfolio assets to take advantage of market opportunities or lessen the impact of a market decline or a decline in the value of one or more issuers."

What do others think? Any experience with these types of commingled funds.
I'm tempted to now go about setting my own 3 fund myself - is that a better alternative to this fund?
The “doozy” seems like boiler plate language. Basically says what you already know if you’re a Boglehead. A passively managed fund doesn’t try to time the market, and therefore might yield better or worse returns than an active fund that does. The expense ratio is higher than I like, though not crazy high either. I’d switch to the 3-fund portfolio if the plan offers the appropriate funds to do so.

Now, I’m guessing your employer switched from Vanguard to Fidelity as their vendor/trustee — hence, you were moved from one TDF family to another. It happens. You were probably given advanced notice. Your active consent wasn’t necessary. Similar thing happened at my mega-public-university system when they reduced the number of fund choices (a good decision in my opinion). If you didn’t sell your position in an eliminated fund, they moved you into the closest remaining alternative(s).

Thanks for that input. The expense ratio of the new FIAM commingled fund is 0.07% versus VFIFX 0.15% according to my 401k plan documents.
Doctor Rhythm
Posts: 793
Joined: Mon Jan 22, 2018 3:55 am

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by Doctor Rhythm »

Ah, 0.07% is quite good if that reflects the total expense/fee associated with the fund. The document you linked to said there was a maximum fee of 32 basis points subject to reduction. At 7 bp, I’d say costs are low enough that it shouldn’t be a factor in choosing a TDF or self-management.
Topic Author
DoctorPhysics
Posts: 164
Joined: Sun Jun 07, 2015 12:50 pm

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by DoctorPhysics »

Doctor Rhythm wrote: Mon Apr 05, 2021 1:11 pm Ah, 0.07% is quite good if that reflects the total expense/fee associated with the fund. The document you linked to said there was a maximum fee of 32 basis points subject to reduction. At 7 bp, I’d say costs are low enough that it shouldn’t be a factor in choosing a TDF or self-management.
Yes, at this point my main concern is with the underlying fund performance of 20 something funds in it. Some funds look active, while some look passive. It’s not clear to me also if the fund managers are actively trying to beat the market. In fact the value add figures from the prospectus seem to show that they are trying to beat the market, and not by much.
Doctor Rhythm
Posts: 793
Joined: Mon Jan 22, 2018 3:55 am

Re: Fidelity FIAM Index Target Date 2050 Commingled

Post by Doctor Rhythm »

DoctorPhysics wrote: Mon Apr 05, 2021 4:18 pm
Doctor Rhythm wrote: Mon Apr 05, 2021 1:11 pm Ah, 0.07% is quite good if that reflects the total expense/fee associated with the fund. The document you linked to said there was a maximum fee of 32 basis points subject to reduction. At 7 bp, I’d say costs are low enough that it shouldn’t be a factor in choosing a TDF or self-management.
Yes, at this point my main concern is with the underlying fund performance of 20 something funds in it. Some funds look active, while some look passive. It’s not clear to me also if the fund managers are actively trying to beat the market. In fact the value add figures from the prospectus seem to show that they are trying to beat the market, and not by much.
Honestly, I would just decide whether you want to use a target date fund or DIY. If you prefer the hands-off ease of a TDF and the overall portfolio and glide path of an offered fund seem reasonable, then I’d say go for it. I wouldn’t let the fact that some of the underlying funds are actively managed deter me if the total ER is just a few basis points.
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