Author Topic: Help me choose a fund (or two) in my new 401k  (Read 1885 times)

FrugalFisherman10

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Help me choose a fund (or two) in my new 401k
« on: November 16, 2016, 08:58:08 PM »
I just started a new job and need to pick an option within my 401k plan administered by Schwab. So far I'm not thrilled with the options (compared to my last employer, but such is life. I should be able to find something good to work with).

The best options from what I can tell are:
1) Invesco 500 Index Trust - https://www.invesco.com/portal/site/us/institutions/collective-trust-funds/product-detail?productId=79
Stats:
Annual Portfolio Turnover* 11.71%
Fees╣ and Expenses▓
Management Fee* N/A*
Annual Fund Operating Expenses 0.03%
Acquired Fund Expenses 0.01%
Total Annual Expense Ratio* 0.04%
*The Total Annual Expense Ratio does not include the
management fee or any client service fees that may be
paid to third party administrators. Contact your Plan
Sponsor to obtain the management fee in effect for your
plan and the names of any third parties receiving any
client servicing fees for this fund.
Read the Important information section for more about
fees and expenses.
1 The Management fees vary by Plan and may include
client service fees payable to third parties at the discretion
of your Plan Sponsor. This negotiated fee can fluctuate
daily based on the various asset level breakpoints
reached at the time the daily fee accrual is calculated for
each Plan. Contact your Plan Sponsor to obtain the management
fee negotiated for your retirement Plan, the
names of any third parties being paid and the amount of
the fee paid to those third parties.
2 Fund Operating expenses are annualized as of the most
recent year end. Operating expenses may include: portfolio
valuation and accounting, transfer agency, custody,
annual report and audit fees. The investment manager
does not asses any fee in connection with the purchase
or redemption of units of the fund.
This fund invests in other funds/investment vehicles

2) Invesco Mid Cap Growth Trust ? (seems like a relatively high exp ratio and definitely a high turnover) https://www.invesco.com/portal/site/us/institutions/collective-trust-funds/product-detail?productId=172&title=invesco-mid-cap-growth-trust
Stats:
Annual Portfolio Turnover* 60.36%
Fees╣ and Expenses▓
Management Fee* N/A*
Annual Fund Operating Expenses 0.21%
Total Annual Expense Ratio* 0.21%

My other money is in a Target Retirement account, and I'd like to try and keep a similar asset allocation across my whole portfolio of 90% Equity / 10% Bonds. I am trying to decide if there is a good option for bonds within my 401k, but I know very little about bonds, yields, etc.
Some Bond options:
3) Invesco Core Plus Fixed Income Trust
 Investment Strategy
The Fund returns are generated by actively managing a diversified portfolio of investment grade securities in the
Treasury, agency, corporate, mortgage-backed and asset-backed sectors.
Stats: Annual PortfolioTurnover* 240.69%
Fees╣ and Expenses▓
Management Fee* N/A*
Annual Fund Operating Expenses 0.11%
Total Annual Expense Ratio* 0.11%

4)State Street US Bond Index Fund - Class C https://www.schwabplan.com/FundDetail/SSCMCZ2.pdf
Strategy - The Fund seeks to offer broadly diversified, low cost exposure to the
overall U.S. bond market. The Fund seeks an investment return that approximates as closely as
practicable, before expenses, the performance of the Barclays U.S. Aggregate
Bond Index (the "Index") over the long term.
Stats:
Average Credit Quality AA2
Average Effective Convexity 0.00
Average Effective Maturity 7.70
Average Yield to Worst 1.94%
Effective Duration 5.44
Total Number of Holdings 7,253
Turnover (As-of FYE 12/31) 76.89%

Or I can do one of their 'strategies' like Conservative vs. Aggressive where they put you in 1% to 5% of pretty much every option. Seems senseless.

Hmmm..check out the screenshot of the other options if you'd like to look around a little more to help. I'm happy to post more information as needed. I'm 26 and was planning on maxing out my 401k this year but now second guessing that.
Thanks for any help! They all seem to have a bit of a high turnover which I don't quite understand.
« Last Edit: November 19, 2016, 09:05:58 AM by FrugalFisherman10 »

travelawyer

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Re: Help me choose a fund (or two) in my new 401k
« Reply #1 on: November 16, 2016, 09:49:40 PM »
You have some reasonable options. Don't forgo the 401k just because you can't buy Vanguard.;) or were there other options you were hoping for? The Invesco index fund you shared has a very low expense ratio and only 11% turnover. The Mid Cap fund's turnover is also not abnormal for an active Fund.

I personally think that all equity is the way to go for a long investing timeframe. I have a mix of a US Value fund and a International equity fund in my 401k. Others are more conservative and would suggest you do a mix of stocks and bonds. A financial planner would probably put you on a ladder where you start with 90/10 equity/bonds and move to more bonds over time.

rpr

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Re: Help me choose a fund (or two) in my new 401k
« Reply #2 on: November 17, 2016, 12:31:12 AM »
Your screenshot got truncated. Do you also have expense ratios for the funds?

FrugalFisherman10

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Re: Help me choose a fund (or two) in my new 401k
« Reply #3 on: November 19, 2016, 09:08:40 AM »
You have some reasonable options. Don't forgo the 401k just because you can't buy Vanguard.;) or were there other options you were hoping for? The Invesco index fund you shared has a very low expense ratio and only 11% turnover. The Mid Cap fund's turnover is also not abnormal for an active Fund.

I personally think that all equity is the way to go for a long investing timeframe. I have a mix of a US Value fund and a International equity fund in my 401k. Others are more conservative and would suggest you do a mix of stocks and bonds. A financial planner would probably put you on a ladder where you start with 90/10 equity/bonds and move to more bonds over time.
Great, thanks for the reply. I generally lean towards something like 90/10, although I hear you (and JL collins) on the all equity theory for long time frames. I don't want an active fund (funny, given I work for an active fund manager... )

FrugalFisherman10

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Re: Help me choose a fund (or two) in my new 401k
« Reply #4 on: November 19, 2016, 09:13:11 AM »
Your screenshot got truncated. Do you also have expense ratios for the funds?
I attached another screenshot to the original post, mainly shows the bond options. I also went back and added expense ratios for some of the ones I'm liking.

Honestly, I will probably do:
a) 90% Invesco S&P 500 fund, 10% State Street US Bond Index Fund - Class C
or
b) 100% Invesco S&P 500 fund

Thanks!

rpr

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Re: Help me choose a fund (or two) in my new 401k
« Reply #5 on: November 19, 2016, 09:25:53 AM »
My preference would be to do a 75/25 stock/bond allocation as I tend to lean a little more
On the conservative side. Plus, it may give you some me funds to rebalance if needed.