Author Topic: New 401k options  (Read 1548 times)

thd7t

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New 401k options
« on: July 17, 2015, 06:52:25 AM »
Our 401k manager had a meeting with my office yesterday to let us know about the new class of funds that had opened up to us.  We moved from (Merrill Lynch) C funds to R funds.  This means that on average, our expense ratios drop from 1.9% down to 1.6%!  We do have an index fund (that got added at my request) with a high expense ratio of 0.36%, but when I asked if we could get the R fund of that (0.11% ER) she said it wasn't available! 

I looked over the returns on the other funds and when the huge ER's were subtracted out, none of them beat the index over any long duration! 

slugline

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Re: New 401k options
« Reply #1 on: July 17, 2015, 08:48:14 AM »
Sounds crappy. Does your plan have an employer match? If so, then it can be still worth participating.

johnny847

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Re: New 401k options
« Reply #2 on: July 17, 2015, 09:01:13 AM »
Our 401k manager had a meeting with my office yesterday to let us know about the new class of funds that had opened up to us.  We moved from (Merrill Lynch) C funds to R funds.  This means that on average, our expense ratios drop from 1.9% down to 1.6%!  We do have an index fund (that got added at my request) with a high expense ratio of 0.36%, but when I asked if we could get the R fund of that (0.11% ER) she said it wasn't available! 

I looked over the returns on the other funds and when the huge ER's were subtracted out, none of them beat the index over any long duration!

Any returns shown in fund history are inclusive of expenses.

However, this doesn't change the fact that high ER funds are terrible.

purpleqgr

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Re: New 401k options
« Reply #3 on: July 17, 2015, 09:19:50 AM »
Hey, that's not too bad on the index fund, at least. My (non marching) 401k's cheapest option is a repackaged Vanguard total stock index... with a .8% ER. What a tidy profit for exactly no value! Grr.

thd7t

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Re: New 401k options
« Reply #4 on: July 17, 2015, 10:12:57 AM »
slugline: I'm in it for the match!  Before I asked for the index fund, the lowest ER we had was 1.8%.  Things are getting better in those terms, though.  0.36% isn't good for in index, but it could be worse.

johnny847: Thanks for the info!  I didn't realize that.

purpleqgr: I feel your pain!  Try asking for them to add something lower cost.  You have nothing to lose!