THREAD IS CLOSED!!! Ask Rande 6000+ USE NEW THREAD

Top 892. Jul 15, 2000 7:17 PM

» JenL_2 - 401(k) plan fund changes

Rande - My company is changing some of the funds in our 401(k) plan:

Large-cap Blend Stock Fund
from Safeco Equity (SAFQX) to Schwab S&P 500 Investors (SWPIX)

Large-cap Growth Stock Fund
adding Janus Growth & Income (JAGIX)

Mid-cap Growth Stock Fund
from Baron Asset (BARAX) to Invesco Dynamics (FIDYX)

International Fund
from GAM International (GAMNX) to Julius Baer International Equity A (FIDYX)

Specialty Sector Fund
adding Rydex OTC Inv (RYOCX)

no changes in the following fund offerings:

Stable Value Fund
Schwab Retirement Money Fund (SWRXX)

Intermediate Bond Fund
Columbia Fixed Income Securities (CFISX)

Balanced Fund
Dodge & Cox Balanced (DODBX)

and the Company Stock (food company)

to add complexity - my husband's company 401(k) plan has these options:

Vanguard 500 Index Fund (VFINX)
Vanguard Extended Market Fund (VEXMX)
Vanguard Wellesley Fund (VWINX)
Vanguard Total International Stock Index Fund (VGTSX)
A Stable Value Fund

and the Company stock (paper company)

For 2000 all new contributions to the 401(k) portion of our portfolio have been DCAing into an approximation of the total stock market. Have a portion of the account already in the balanced funds, and international funds. The IRAs are mostly in JAVLX, JAGTX, JAGLX, JAWWX, TVFQX, TEFQX, BARAX, CUEGX, and tech stocks.

Rande - Any comments, suggestions would be appreciated......Jen

-- posted by JenL_2

Top 893. Jul 15, 2000 7:28 PM

» JenL_2 - forgot one ....

also no change in..

Large-cap Value Stock Fund
Davis New York Venture A (NYVTX)

OK that's all.....Jen

-- posted by JenL_2

Top 894. Jul 15, 2000 9:40 PM

» AL_W - Jen.... check this out

Jen.....

Check out if see if old plan terminated and this is a new one. If it terminated, you should be able to withdraw and do as you please with the money. Of course, if that withdrawal is not to a roll-over, you are cazy.

Frequently, a change like this is really a termination, and they don't adequately inform you of the option to withdraw.

My Company did similar thing in 92, and not a peep was said about withdrawals, but if we called the trustee, Fidelity, they would tell us about it. I found out last year that I could withdraw about 30% of the company stock ( from matching ), which I did in March at about $37 a share, to a rollover IRA at Fidelity. Well today, that account is now worth better than 2x what the company stock left in the 401K is worth. Has turned out to be the best investment decision of my life. I bought CSCO, AMAT, FSPTX and FLCSX with that money. It up near 50% since the move.

-- posted by AL_W

Top 895. Jul 15, 2000 10:23 PM

» JenL_2 - Not a new plan

Al -Thanks but no this isn't a termination of the old plan and the adoption of a new plan. Although that has happened several times in the past every time our company was bought & sold, but that was more of a total change, and we weren't informed at those times of an option to roll-over our 401(k). Even though our company has recently been bought again, we've been informed that the new company won't interfere with our current benefits plan.

From the company Benefits Update announcement:

As part of our continuing effort to offer quality and diversification in investment options, the ....401(k) Savings Plan Investment Committee that retains an independent investment advisor to assist in fund selection, performance monitoring and fund classification.

In reviewing the funds for the 401(k) Savings Plan, the committee looks for consistency in performance as well as a fund's ability to appropriately reflect the style and characteristics of the investment category it is selected to fill.

The Investment Committee met recently and reviewed the performance and asset class of each investment option...

....The committee believes that these replaced funds are no longer top performers within their asset classes and, in some cases, there has been a fundamental shift in the management of the fund.

My only concern with these changes are that maybe the committee is chasing performance, selecting funds that possibly will underperform the current funds going forward, and then trade out of the underperforming funds too soon. The last 401(k)funds change was in June '98, when they changed from Heartland Value Fund to Baron Asset as the Agressive Growth Option, and from Templeton Foreign I Fund to GAM International for the International Option. Now two years later they are changing again out of BARAX and GAMNX.

Not complaining mind you - am happy to have the 401(k) plan with all the options we do have, but just wondering if it's wise to switch funds so often......Jen

-- posted by JenL_2

Top 896. Jul 15, 2000 11:18 PM

» AL_W - Jen...

Jen..

I too would ask as to why they are changing funds?

My 401K is roughly 1/3 FDEGX ( aggressive Growth - a lot of tech ) 1/3 Fidelity SP500, and 1/3 Money Mrkt. Remember, I have said that I took some $ to cash in Jan, more from an asset allocation balance act but pushed by Bob's concerns and bond funds were not the place to go while the interest was still rising causing valuation to go down.

Historically, this account had been 100% invested.
I'll want to hold 50% growth, 35% SP500 and 15% interest bearing in the future and let it get there by growth. When interest levels off, I'll switch to Corp Bond Fund. No GNMA fund available to us.

A good moderate portfolio.

Good luck with yours

-- posted by AL_W

Top 897. Jul 16, 2000 6:41 AM

» Rande - Jen,

Jen,

Looks like you've got plenty of options between your and your husband's plans. The changes in your plan may be due to the former funds failing to meet some objective criteria the plan's investment committee has set for performance measurement. Hopefully, that's the case and they're making suitable replacements based on due dilligence.

Defintely would take a top-down, big-picture approach in allocating the 401ks -- taking into account both spouse's plans and outside taxable investments. To the extent possible, it's not a bad idea to use the retirement accounts to implement the fixed-income portion of your allocation, if any, and use taxable accounts for more tax-efficient investments (long-term capital gain assets with low turnover, such as stock index funds). Of course, depending on the choices, index funds can be a great option for the 401k too.

-- posted by Rande

Top 898. Jul 16, 2000 7:15 AM

» JenL_2 - Taxable Account

Thanks Rande - I do look at all the accounts as one big portfolio, allocating among the mutual fund choices in the 401(k)s, supplementing with more sector funds and stocks in the IRAs. But for the first time this year am starting to fund a taxable investing account with Schwab. In that account so far I have these funds open:

- Schwab S&P 500 Investors Fund (SWPIX)
- Schwab 1000 fund (SNXFX)
- Schwab Small Cap Index fund (SWSMX)

I may invest in some individual stocks that don't pay dividends in the taxable account to take advantage of no taxable gains until selling, and also to be able to offset taxable gains with tax losses.

I need to cut down on the overlap between the different accounts. Don't need to own the same fund in more than one account, and each account doesn't need to be balanced. Like you said Rande - gotta look at the Big Picture.....Jen

-- posted by JenL_2

Top 899. Jul 16, 2000 8:05 AM

» Rande - Jen,

Jen,

Yes indeed -- the fewer funds, the better. As you know, Schwab does have a Total Stock Market fund, but using the Schwab 1000 and a small-cap fund can assist in keeping the overall balance in line with whatever weighting you seek.

Seems sometimes that we go through a kind of evolution as investors -- we start out with one or two stocks or funds, get overloaded with "information" and end up accumulating all kinds of different funds and stocks, then, as we mature, begin to follow Thoreau's advice to "simplify, simplify."

-- posted by Rande

Top 900. Jul 16, 2000 9:09 AM

» Rande - Guess the Big One this week is the CPI on Tuesday -- .

Guess the Big One this week is the CPI on Tuesday -- .5% overall and .2% at the core are expected. Housing starts and building permits on Thursday and latest budget surplus figures on Friday (I'll be away on business on Fri and Sat in Las Vegas, so will look to everyone else to get filled in when I get back on the latest budget surplus surprise).

Meanwhile, some good stuff in this week's Barron's:

Not willing to accept the efficient market hypothesis? Looking for an edge? Check out, "What Moves the Market?" by David Franecki for a way to play the earnings estimate game.

MUST READ -- "Special Delivery" (Tried and true approaches win in the long run for market letters), by Robin Goldwyn Blumenthal. Blumenthal asks the question, "Why should investors plunk down a couple of hundred dollars a year for a newsletter when they can buy [and hold] an equity index fund?" Read on....

On the "Economic Beat," Gene Epstein answers the question -- "Productivity: Why Output Per Worker Matters So Much." Excellent.

Cover story, "Street Smart," provides a mutual fund manager ranking.

Oh yeah, the "Market Watch" column quotes some newsletter by a guy named Brinker: "Although we believe the Nasdaq Composite has the potential to trade slightly higher over the near term, we anticipate the overall market..will roll over this summer." Amazing, the Nasdaq has gone from an index impossible to predict to, well...old news, eh?

-- posted by Rande