I'm in the process of researching Mutual Fund Providers as an alternative to my existing 401k Provider (Charles Schwab). I'm seriously considering rolling my 401k funds into an IRA account. I'm presently looking at T. Rowe Price, Fidelity, American Funds and Vanguard. I have also been a longtime customer of a Vanguard brokerage account and a few small IRA accounts. I have generally gravitated toward Index funds. I have never used a Target Date type of mutual fund retirement account, but as I look into them, they seem to be structured very similarly to my personal investment portfolio breakdown anyway. I will likely start taking some distributions from my retirement accounts somewhere between 9-12 years from now.
1. What are your thoughts on a Target Date Mutual fund vs. your own allocation?
2. Do you split your investments across different mutual fund providers or do you prefer to keep all your funds with one investment firm?
3. Is there any organization other than Morningstar that "objectively" rates mutual fund investment firms?
4. Aside from expense ratios, portfolio composition and/or historical returns, are there any less obvious factors you consider when comparing mutual funds?
5. For those of you who are in your 60's and expect a reasonably long retirement lifespan (up to 90 or beyond), have you changed your portfolio allocation significantly or do you stay roughly the same?
1. I choose my own allocation, largely because Target Date funds have a higher ER.
2. I prefer to keep everything at one place; it just simplifies record-keeping. But there's nothing wrong with having stuff at more than one place.
3. Dunno. FWIW, I've seen a lot of chatter on a couple of forums about how Vanguard's customer service has gone downhill in recent years. It can take 45+ minutes to get a Vanguard rep on the phone these days, where at Fidelity, it's typically a few minutes. I still use Vanguard, but if it wasn't such a hassle, I'd consider moving to Fidelity. (I still may if I encounter problems.) Plus, Fidelity lets you purchase fractions of ETFs, while Vanguard does not. I've also heard decent things about Schwab as a brokerage firm.
4. My main consideration with mutual funds (index funds, in my case) is tax efficiency. So I keep bond funds in tax-deferred accounts (IRA), because they throw off dividends that are taxed as ordinary income. I keep stock funds in taxable accounts, because most of the stock fund income is long-term capital gains, which is taxed more advantageously. I also keep stock funds in after-tax accounts (Roth), because they seem to have the greatest growth potential.
5. This is an ongoing debate for me. I wouldn't mind changing to a more conservative AA, but I set my AA partly because of the level of return I'll need over time. The goal is sleep well at night (SWAN). For some people, that becomes more conservative in retirement. If someday I get a big enough windfall that I can change my AA to something more bond-heavy but still have enough $$, I might.
