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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Threshkin on August 26, 2018, 10:00:12 PM

Title: Need Advice on 401k Reallocation
Post by: Threshkin on August 26, 2018, 10:00:12 PM

I am thinking about changing my investment allocation in my old 401k.  This account is >25% of my entire portfolio so I want to get it right.

Current allocation:

• Fund Name - Allocation - YTD Returns - Expense Ratio (gross)
• Vanguard Institutional 500 Index Trust - 49.35% - 8.86% - 0.01%
• Vanguard Institutional Extended Market Index Trust - 26.65% - 11.75 - 0.04%
• Vanguard Institutional Total International Stock Market Index Trust - 24% - (3.49%) (yikes!) - 0.07%

All of these funds are new as of 2017 so there aren't any 3 year or LOF return numbers.  These are all low expense ratio versions of retail Fidelity funds popular with MMM investors.

As you can see, the International fund is not doing well.  Given the current political climate, I do not expect this situation to improve in the near future.

Here are some of the fund options I have to choose from:

• Fund Name - YTD Returns - 3 Year Return - LOF Return - Expense Ratio (gross)
• Fidelity® Contrafund® Commingled Pool Class 3 - 14.15% - 14.68% (3yr) - 13.71% - 0.35%
• Fidelity ® Growth Company Commingled Pool Class 3 - 17.75% - 17.71% (3yr) - 18.12% - 0.35%
• Dodge & Cox Stock Fund (DODGX) - 6.78% - 1.20% (3yr) - 10.09% - 0.52%
• Fidelity® Worldwide Fund (FWWFX) - 9.77% - 9.48% (3yr) - 7.09% - 0.81%
• William Blair SMID Cap Growth Strategy - 18.25% - 13.90% (3yr) - 16.80% - 0.7035%

There are LOTS of other funds, these are just the ones that have the best short and longer term returns.

Caveats:

• I am not hung up on keeping my international exposure in this account for the next few years.
• I included Expense Ratio because people ask but I am more concerned with net return.
• I am happy with my overall portfolio allocation.  While this is the biggest single account it still is only a small portion of my portfolio.

[li]Several of these accounts do not have ticker symbols.  I can add descriptions and top holdings if necessary.[/li][/list] 

Thanks in advance!

Title: Re: Need Advice on 401k Reallocation
Post by: hendrickj on August 27, 2018, 12:42:45 PM

It is still hard to predict the future expected returns of international funds.
For example, JP Morgan capital market assumptions (https://am.jpmorgan.com/us/institutional/our-thinking/2018-long-term-capital-market-assumptions) include return expectations that are relatively in line with the others.

Therefore, for a diversified portfolio, I would stick closer to the market capitalization weighted portfolio, also known as the market portfolio, similarly to Vanguard's retirement portfolio's (https://investor.vanguard.com/mutual-funds/target-retirement/#/).

Title: Re: Need Advice on 401k Reallocation
Post by: chasesfish on August 27, 2018, 05:44:36 PM

I think you have a hell of an allocation today with low costs.   I wouldn't move it into any of the options listed below.

International has trailed the US for a long time, but population growth is mainly outside the US and the world is becoming more global.  Don't give up on that allocation choice, it may turn out to be a winner long term