Author Topic: New 401k all socially responsible funds with high exp ratios  (Read 588 times)

samanil

  • Stubble
  • **
  • Posts: 172
  • Age: 34
  • Location: Seattle
New 401k all socially responsible funds with high exp ratios
« on: October 26, 2021, 09:27:14 PM »
I started with a new company with a 401k that consists entirely of socially responsible funds with high expense ratios, except for one: Tiaa-Cref Social Choice Equity Inst (TISCX). The ER is .18, it is a mutual fund, and its primary holdings are:

Microsoft ............................................................. 5.21%

Tesla ................................................................... 1.67%

NVIDIA ................................................................ 1.51%

The Home Depot ................................................. 1.28%

Procter & Gamble................................................ 1.26%

Mastercard .......................................................... 1.24%

PayPal Holdings .................................................. 1.15%

Adobe .................................................................. 1.14%

Walt Disney ......................................................... 1.09%

Cisco Systems .................................................... 1.02%

It says "The Fund seeks a favorable long-term rate of return. The Fund attempts to track the return of the U.S. stock market as represented by its benchmark, the Russell 3000 Index, while investing only in companies whose activities are consistent with the Funds social criteria."

Seems good...?

I posted this on r/personalfinance and someone said they suspected this narrow range of fund options was a violation of the employer's fiduciary responsibilities. I'm curious what you clever people's opinions are.

theolympians

  • Stubble
  • **
  • Posts: 229
Re: New 401k all socially responsible funds with high exp ratios
« Reply #1 on: October 27, 2021, 05:00:55 PM »
"Socially responsible", it looks like their top ten are typical large cap investments. Anyway, here is an article about expense ratios. It seems average for a passive fund.

https://www.investopedia.com/ask/answers/032715/when-expense-ratio-considered-high-and-when-it-considered-low.asp

also:

https://finance.yahoo.com/quote/TISCX/

I'm not a lawyer, so I don't know about them violating their fiduciary responsibilities by not having a benefits company that offers more choices. There are many on this forum who are in the same boat as you, having limited investment options through company offerings.

yachi

  • Handlebar Stache
  • *****
  • Posts: 1055
Re: New 401k all socially responsible funds with high exp ratios
« Reply #2 on: October 28, 2021, 02:32:27 PM »
Well, it's diversified and cheap.  You can get a list of all the stocks toward the middle of the page here.

It's capitalization weighed, like most S&P500 funds, so larger companies make up a higher percentage of the pot.  Large companies of note that are missing include:
Apple
Amazon
Berkshire Hathaway
Alphabet (Google)
Facebook
JP Morgan Chase
Johnson & Johnson
Visa (Mastercard and American Express are included)

You could pick up a few shares of some of these companies in an IRA if you want to balance out the 401(k)