Author Topic: Cash Drag with Work 401k Target Date Funds  (Read 587 times)


  • Bristles
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Cash Drag with Work 401k Target Date Funds
« on: January 27, 2017, 02:40:46 PM »
My work offers target date funds with a pretty low ER (0.09%). What I don't like about them is the percent they keep in cash. For example, the 2050 target date fund they advertise as a 94/6 split has the following allocation percentages:

U.S. Stocks               55.4
Non-U.S. Stocks    36.8
Bonds                      0.8
Cash                      5.6
Other                      1.4

So their bond allocation is really just almost all cash. Am I understanding that right? Do others feel this is bad for early retirees?

I have thought about moving out of the target date fund, but the only other equity funds offered with a 0.10% or less ER are below. Everything else is in the 0.30%+ range.

BlackRock Russell 1000(R) Index M (Large cap US)
BlackRock Russell 2000 Index-M (Small cap US)
BlackRock MSCI ACWI ex-U.S. Index M (Large cap international)

Thoughts on moving out of the target date funds and just doing a split between the above funds? The cash portion of the above three funds ranges from 0.9% - 2.8%. ER would also be lower also (in the 0.06% range).

If I did this would the combination of the two BlackRock Russel 1000 and 2000 US funds roughly be analogous to Vanguard's Total Stock Market fund? Any idea how the BlockRock MSCI international fund compares to Vanguard's total International Stock Index Fund? Thanks.