Author Topic: Matched 401k w/ No Index Available  (Read 2322 times)


  • 5 O'Clock Shadow
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Matched 401k w/ No Index Available
« on: June 24, 2013, 06:57:56 AM »
Long time stalker, first time poster! Excited to join the community!

My wife is eligible to start taking advantage of her new job's 401k. They match up to 4%, and we intend to max out her contributions.  Luckily (and ;) unfortunately) I have been a 3M reader for about a year now, absorbing the wisdom. So my first step when she brought home her investment options was to browse through looking for a cheap index fund.  To my horror, chagrin, and dismay I found no such thing.  Instead her company has a very small array of funds with an average expense ratio of 1.5%.

The closest I could find to an index fund was a set of 'managed' funds that "provide diversification."  As far as I can tell that's another word for "provide security for the fund manager's boathouse."

The expense ratios for these funds are actually cheaper than the others, and they let me pick from four levels of aggresiveness.  The highest, however, has an expense ratio of 1.1%.

What do you do when you can't let statistics do your fund picking for you?


  • Magnum Stache
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Re: Matched 401k w/ No Index Available
« Reply #1 on: June 24, 2013, 07:07:38 AM »
IMO Find the happy medium of diversified within the US total market and low fees. Contribute up to the match and look outside of the 401k for other investment vehicle options.

After that can she get involved with HR on improving the fund options they have with whatever company it is with?

Another Reader

  • Walrus Stache
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Re: Matched 401k w/ No Index Available
« Reply #2 on: June 24, 2013, 09:07:31 AM »
The managed "fund of funds" has a low expense ratio, because there is not much work involved.  If you dig a little deeper, you will probably find each of the underlying funds has a relatively high expense ratio.  You are likely paying twice for the management of these funds.

When faced with a sea of garbage choices in a qualified plan, I generally select the best performing funds, independent of the stock sector.  For example, if they have a good small cap, I pick that.  Awful mid-cap?  Skip it.  These selections may not meet your asset allocation target, but you can balance that out in the IRA's and your plan.


  • 5 O'Clock Shadow
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Re: Matched 401k w/ No Index Available
« Reply #3 on: June 24, 2013, 05:35:40 PM »
I'll echo matchewed here with "have her ask HR."

It is not difficult to add funds to the plan.  (I'm in HR and just did it.)  It's just a little extra work.  It can be done.

Don't let her let up.  The option is more than likely out there, you just gotta be the squeeky wheel to get it added.