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Beginning this year I have the opportunity to participate in my new employers 401(k) plan. One option is a S&P 500 index fund, which I understand is the way to go.

However, it charges 5.75% sales fee and, over the last 5 years, has returns well below the S&P and comparable mutual funds such as Vanguard's. It also may "invest in common stock not included in the S&P in order to reduce tracking error". Looking at it's current numbers it appears to be matching the performance of the S&P as well as the other funds are. The other options in the plan are managed funds, which do not perform as well as index funds, but are no load and have low annual expense ratios. Some performed better than my option.

Are some of these features the reason for its performance? What is "tracking error"?

Retirement for me is about 20 years away. Is this still the best option?

Thank you, Lewis
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