Author Topic: Building Fidelity 401k Plan - what funds to include?  (Read 4460 times)

Freedom2016

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Building Fidelity 401k Plan - what funds to include?
« on: February 16, 2015, 12:56:44 PM »
I am in the fortunate position of being on the committee that is creating our firm's new 401k plan. Our Fidelity rep has sent an initial/default fund menu, below. We can change/add offerings though what I'm led to understand is that even if nobody invests in the higher expense ratio funds, they make money from the fund just by having it in our portfolio. Note also that they will be including target date funds and BrokerageLink.

My main questions:
(1) Are there any other Spartan funds we should add?
(2) If we've got the Spartan funds, is there any advantage to adding Vanguard funds (I have VTSAX in a brokerage acct; if yes, what others would be good?)?
(3) What other funds do folks like that we should consider including?


FSITX Fidelity Spartan US Bond Index Fund Fidelity Advantage Class (Expense Ratio 0.17)
FUSVX Fidelity Spartan 500 Index Fund Fidelity Advantage Class (ER 0.07)
FSEVX Fidelity Spartan Extended Market Index Fund Fidelity Advantage Class (0.07)
FSGDX Fidelity Spartan Global ex US Index Fund Fidelity Advantage Class (0.28)
FRTXX Fidelity Money Market Fund (0.42)
FINPX Fidelity Inflation-Protected Bond (0.45)
FTBFX Fidelity Total Bond Fund (0.45)
EVIBX.LW Eaton Vance Income Fund of Boston Class A Load Waived (1.00)
FLCSX Fidelity Large Cap Stock (0.88)
FBGRX Fidelity Blue Chip Growth Fund (0.80)
DDFIX Invesco Diversified Dividend Fund R5 Class (0.60)
OPMSX.LW Oppenheimer Main Street Mid Cap Fund Class A Load Waived (1.11)
JDMAX Janus Enterprise Fund Class A Load Waived (1.12)
FDVLX Fidelity Value Fund (0.76)
GTCSC Glenmede Small Cap Equity Portfolio Class Advisor (0.91)
RSEGX.LW RS Small Cap Growth Fund Class A Load Waived (1.41)
ESPIX Wells Fargo Advantage Special Small Cap Value Fund Administrator Class (1.25)
FRESX Fidelity Real Estate Investment Portfolio (0.80)
IHOSX The Hartford International Opportunities Fund Class R4 (1.15)
GOBAX.LW Legg Mason BW Global Opportunities Bond Fund Class A Load Waived (0.93)
FNMIX Fidelity New Markets Income (0.86)
HLEMX Harding Loevner Emerging Markets Portfolio Advisor Class (1.46)

seattlecyclone

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #1 on: February 16, 2015, 01:04:07 PM »
Can you get a total US stock market index fund in there? I know you can approximate one by buying the S&P 500 and extended market funds in an 80/20 ratio, but I'd rather just buy the one fund.

Frankies Girl

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #2 on: February 16, 2015, 01:19:04 PM »
I don't see the following:

FSTVX - Spartan Total Market Index Fund - Advantage class
^this is the one that matches up with Vanguard's VTSAX total market index fund. This is a must as far as I'm concerned to add in. The under 10k buy-in for the same fund at a slightly higher expense ratio is FSTMX (investor class), so might want to check to see if that can also be included.

FSRVX - SPARTAN REAL ESTATE INDEX FID ADV CLASS
^ this is a super REIT index fund that is waaaaay cheaper than the one you've got (FRESX) but is a higher minimum buy-in, so would be good to include.


You could also check the Fidelity equivalents of Vanguard funds on this page:
http://www.bogleheads.org/wiki/Fidelity


There are generally no transaction fees associated with buying Fido funds in a Fido account, but adding in outside options (like Vanguard) mean there may be transaction fees on top of the management/expense ratio fees, so I personally would be fine with just having Fido funds as long as there were a good variety that match up with Vanguard's offerings (which would be the case if you have the funds above in addition to some from the link, and the ones you've already listed, even though there are several I'd say were absolute dogs on that list).

My work's plan includes the Spartan total stock index thank goodness, but the REIT above (FSRVX) and the FSITX bond fund are my other two that make up the rest of my portfolio.

« Last Edit: February 16, 2015, 01:33:02 PM by Frankies Girl »

Freedom2016

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #3 on: February 16, 2015, 01:27:07 PM »
Thanks - good stuff!

By dogs do you mean the ones with the high ER's? I agree and would never invest in those. Part of me doesn't care if they are there as long as the good funds are too... and I can educate my partners and employees about choosing the less expensive funds. But should I push to drop them altogether?

Interestingly I asked if there were additional fees to buy Vanguard funds and the guy said no - but perhaps he was word smithing his answer. (Looks like this could be a moot issue if we get all the Spartan funds we want in there.)

Frankies Girl

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #4 on: February 16, 2015, 01:37:13 PM »
Thanks - good stuff!

By dogs do you mean the ones with the high ER's? I agree and would never invest in those. Part of me doesn't care if they are there as long as the good funds are too... and I can educate my partners and employees about choosing the less expensive funds. But should I push to drop them altogether?

Interestingly I asked if there were additional fees to buy Vanguard funds and the guy said no - but perhaps he was word smithing his answer. (Looks like this could be a moot issue if we get all the Spartan funds we want in there.)

Yeah on the dogs - anyone that isn't reading up on investing might expect that the higher the expense ratio, the better the fund is (I've run into that at my work anyway!) but as long as you explain why you're technically including them in the choices, and "buyer beware" on them, I would think that's good.

I may be wrong on the extra fees to buy non-Fido funds in a Fido 401K; they can wave whatever fees they'd like technically to get your business, so if they say there are no additional costs other than what is listed, they may be telling the truth. I forgot that aspect (they can adjust/wave whatever). As long as you get that sort of thing nailed down, including Vanguard or whomever is a great idea (as long as you don't get so many funds as to make it daunting for the average investor to figure out what they want; sometimes too many choices can be paralyzing).

Good luck!

JetBlast

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #5 on: February 16, 2015, 04:22:46 PM »
As long as you get that sort of thing nailed down, including Vanguard or whomever is a great idea (as long as you don't get so many funds as to make it daunting for the average investor to figure out what they want; sometimes too many choices can be paralyzing).
I think they might be getting close to that point of paralysis. 22 funds already, and probably at least another half dozen target date funds on the way.  Is it really necessary to have three actively managed small cap funds? 

401k plans and Costco both have the same problem. Too many choices actually decreases participation (buying). You go to Costco and you see one brand of ketchup, three brands of toilet paper, etc... and you don't see a lot of hemming and hawing between products at Costco. It's one of the few places where consumers seem to still recognize the concept of 'good enough.'  Same with a 401k. Too many choices and people delay enrolling for fear of making a mistake. Fewer choices and enrollment goes up.

Freedom2016

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Re: Building Fidelity 401k Plan - what funds to include?
« Reply #6 on: February 16, 2015, 07:11:16 PM »
I get your point, JetBlast. I've ultimately asked for a net increase of 5 funds (suggested 8 total Spartan funds and that 3 of them replace funds on the original list). I'll talk with my other committee members about further reducing the number of funds.

Having said that, our company size is 7 people, and at least 6 will be participating in the 401k (I know this b/c 6 of us have agreed to roll over as many eligible accounts as we can, to increase our total assets and thus reduce fees). I'm in a good position to assist/educate folks on which funds to choose.