Author Topic: Deferred Comp International Fund Options  (Read 2125 times)

KCM5

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Deferred Comp International Fund Options
« on: March 19, 2015, 11:45:21 AM »
So I've decided on an asset allocation that I'm happy with. I'm going with 50% Vanguard Total Stock Market (fee within our plan is .05%) and 50% international. My gut reaction is to go with the one with the lowest fee, but I'm not sure I'm making the right choice. The funds available in our plan are these:

AF Capital World G&I   R4   0.60%   0.25%   -0.06%   0.79%   0.00%   0.79%   .35
AF EuroPacific Grth   R4   0.69%   0.25%   -0.10%   0.84%   0.00%   0.84%   .35
Drey Intl Stk Indx   --   0.35%   0.00%   0.25%   0.60%   0.00%   0.60%   .35
MFS Intl Value   R3   0.90%   0.25%   -0.08%   1.07%   0.00%   1.07%   .63
Oppenheimer Dev Mkts   Y   1.00%   0.00%   0.07%   1.07%   0.00%   1.07%   .3
Oppenheimer Intl Gr   A   0.80%   0.25%   0.09%   1.14%   0.00%   1.14%   .55

The numbers after the fund name are :Underlying Fund Share Class, Invest Mgmt Fee, 12b-1 Fee, Other Exp, Total Annual Underlying F.O.E.,   Mortality, Expense and Admin Charge, Total Fees & Charge, Fees/Payments We Receive from the Funds.

I've been paying attention to the second to last number, the total fees and charge and the Dreyfus International Stock Index has the lowest at .6%.

Should I also be paying attention to the performance of these fund or should I ignore that because "past perfomance does not guarantee future results?" The Dreyfus fund seems to not perform as well as others, such as the AF Capital World G&I, which has better performance for the last year as well as 3, 5, and 10 years. It also has fees that are .19% higher.

My other option is to put all of my 457 money into the Vanguard Total Stock Market and invest our IRA money into the Vanguard Total International Stock Index fund with a 0.14% fee. The only issue with this is that we have so much more money in the 457 than the IRAs that the split would be more like 90% domestic, 10% international.

Another Reader

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Re: Deferred Comp International Fund Options
« Reply #1 on: March 19, 2015, 12:05:05 PM »
If the index is the same, the Dreyfus fund should mirror Vanguard.  Except for that pesky fee, of course. 

I would compare the performance of the two American Funds to the Vanguard fund you would have in your IRA.  If, after expenses, the American funds consistently out perform the indices, I would consider putting some money to work there.  When it comes to international markets, I can see an advantage to fund management that can separate out poorly managed companies in countries that do not follow GAAP and avoid investing in them.

Expenses over one percent for a mediocre fund company would keep me from investing in the last three.

KCM5

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Re: Deferred Comp International Fund Options
« Reply #2 on: March 19, 2015, 01:00:18 PM »
So I hear you saying that I could put SOME money in one of the American Funds - I'm leaning towards CWGIX if that's the case. But that I shouldn't put it all in it. Is the reason you said some because of a reluctance to rely on actively managed funds?

I really want a simple portfolio that I don't have to think about pretty much ever so I'd like to do only 2 funds if possible. My plan is to set the elections, get everything transferred and then look at it once every year or two to rebalance. So I guess I'm back at 50% VTSMX and 50% DIISX.

Decisions are hard! I already made the transfers and cancelled them today. Hopefully I'll feel more confident tonight and actually pull the trigger.

skyrefuge

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Re: Deferred Comp International Fund Options
« Reply #3 on: March 19, 2015, 01:33:54 PM »
I really want a simple portfolio that I don't have to think about pretty much ever so I'd like to do only 2 funds if possible. My plan is to set the elections, get everything transferred and then look at it once every year or two to rebalance. So I guess I'm back at 50% VTSMX and 50% DIISX.

Yeah, given your preferences, I'd go with that. Or even something like 60% VTSMX, 40% DIISX in your 457, with VTIAX filling up your IRAs (or whatever it takes to get a 50/50 overall allocation when your IRAs are 100% international). Just because, yeah, DIISX performs a lot like VTIAX, but worse because of that ER.

You don't want CWGIX. Just because a fund ends up in the "International" section of your fund listing doesn't mean that it covers what you want. Currently it only holds about 50% international stocks (much of the rest is US stocks, which is surely a large part of why it has outperformed true "international" funds recently).

Then ODMAX is an emerging markets fund, which is also rather different than a broad "international" fund, so that leaves AEPGX, MGIAX, and OIGAX as the only reasonable comparisons to DIISX. And sure, some of them have outperformed in the past, but if you believe in the concepts of indexing, then that means you believe they're unlikely to continue their outperformance into the future, which is the period of time that matters to you.

Here's the historical growth chart of all these funds that I threw together if you want to visualize their past performance.

KCM5

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Re: Deferred Comp International Fund Options
« Reply #4 on: March 19, 2015, 01:53:27 PM »
I really want a simple portfolio that I don't have to think about pretty much ever so I'd like to do only 2 funds if possible. My plan is to set the elections, get everything transferred and then look at it once every year or two to rebalance. So I guess I'm back at 50% VTSMX and 50% DIISX.

Yeah, given your preferences, I'd go with that. Or even something like 60% VTSMX, 40% DIISX in your 457, with VTIAX filling up your IRAs (or whatever it takes to get a 50/50 overall allocation when your IRAs are 100% international). Just because, yeah, DIISX performs a lot like VTIAX, but worse because of that ER.

You don't want CWGIX. Just because a fund ends up in the "International" section of your fund listing doesn't mean that it covers what you want. Currently it only holds about 50% international stocks (much of the rest is US stocks, which is surely a large part of why it has outperformed true "international" funds recently).

Then ODMAX is an emerging markets fund, which is also rather different than a broad "international" fund, so that leaves AEPGX, MGIAX, and OIGAX as the only reasonable comparisons to DIISX. And sure, some of them have outperformed in the past, but if you believe in the concepts of indexing, then that means you believe they're unlikely to continue their outperformance into the future, which is the period of time that matters to you.

Here's the historical growth chart of all these funds that I threw together if you want to visualize their past performance.

Thanks for the chart!

Okay, this makes me feel better. I'll go 60/40 on VTSMX and DIISX in my 457, VTSMX in my 401a and VTIAX in my IRA. This basically gets to a 50/50 allocation - maybe a bit more domestic than international, but not bad. And simple, that's the key.