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Hi! I have well over 240k to rollover into an IRA. I am looking at two Fidelity funds. The first is the Spartan 500 Index fund (Advantage Class) FSTVX, which has fairly decent returns and a LOW expense ratio of 0.07!!!!!! The other is the reopened Magellan fund FMAGX which has similar returns, BUT a much higher ER of .54....Granted .54 is low, but its almost 8 times higher than the Spartan fund. Curious for some feedback. I also have additional funds which I would like to put into some international fund, looking again at the Spartan FSIIX international index fund, again for a VERY low expense ratio. Maybe a bond funs also...looking at a 10 year time frame. Thanks, Bill
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Since I held some Magellan in the 1990s, its still tracked in my Quicken. I look at it every couple years and haven't seen it do well enough to want to get back into it. I compare it to the funds I bought when I sold the Magellan and it is still so far behind that I have no interest in it at all.

Barbara
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There is no reason, in looking at an actively managed fund, to consider the fees in such detail. The bottom line is what you get after the fees are paid. You can see that in a chart of the fund, but get a chart with distributions reinvested. Compare charts to see which have done the best, and re-evaluate regularly.
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Many years ago, I read something that stuck with me - you can't predict future returns based on the past, but you can predict future costs. The higher expense ratio is like a ball and chain dragging down the actively managed fund. You are wise to consider the expenses since it's likely to affect future earnings.

FWIW, when I rolled over my 401k last year, I went with a tweaked Coffeehouse portfolio (which reminds me, I need to rebalance). IIRC, all the funds had pretty low expense ratios.

-murray
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Murray, thanks! Read a good Coffeehouse article with all the suggested fund types. The article was old though..(2005) I take it though you are very pleased with the results? Thanks, Bill
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The article was old though..(2005) I take it though you are very pleased with the results?

Using it for only a year, I can't really say and, frankly, I stuck a relatively small amount in there just to get a taste as we approach retirement.

I plan on getting the Coffeehouse book to get a more thorough understanding.

-murray
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>> Using it for only a year, I can't really say and, frankly, I stuck a relatively small amount in there just to get a taste as we approach retirement. <<

I've used an asset allocation model not too unlike Coffeehouse since 2000. It did VERY well from 2001 to 2006. In 2007, not so much.

#29
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ADVDX. Reinvest the dividends.

CGMFX. Each January, replace it with the prior year's top fund.


Bond funds? Pluuuease; you'll lose money after inflation.
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..I have well over 240k........Granted .54 is low,...

0.54% of 240K is $1296 per year compared to $168 for the index fund.

It might be low compared to even worse choices but that is like saying a light beer is low in calories.

The Fidelity Magellan fund had some great years but now it is frequently cited as an example of how when a fund becomes huge, it becomes a closet index fund that more or less performs like an index fund, but with higher fees.

http://www.businessweek.com/magazine/content/04_36/b3898134_mz070.htm

Keeping costs low is one of the few things that you can control and over the decades it makes a huge difference. Don't compromise on low costs unless you can come up with a compelling reason to.

To you list of possible option for the stock part of your portfolio I would also consider the Fidelity;

Total Market index fund(FSTVX) to give you more diversification with smaller stocks

International Stock Index Fund(FSIVX) to get more international diversification.

The exact percentage in each fund will depend on the details of your situation but 20% in the international fund would be considered low for many people.

Greg
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