Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Hello All,
I'm pretty new to this board. My wife's company is changing the management of their 401k program next month. We received an info packet on the new setup which was impressive; a prospectus for each fund, more index funds available, and just a lot of good information. One thing is new to us. Some of the funds are commingled, i.e. privately run just for 401k investment. Some of these funds look attractive but we question how well we'll be able to investigate their make-up and history since they're not publicly traded. What are your experiences with funds of this type (commingled)? The management company is State Street Global Advisors. Any comments on them?
Many Thanks

Kevin
Print the post Back To Top
No. of Recommendations: 0
It's not uncommon for a 401(k) plan to have mutual fund options that are not listed on Morningstar or available to the general public. These types of funds can be called EBTs (employee benefit trust), Colective Trusts or something along those lines. These types of funds tend to be (but are not always) similar to existing funds that are more widely available, but have slight differences, such as a lower expense ratio, a slightly different objective or focus. When deciding if and how much to allocate to these funds, use the same approach that you use for the non-commingled funds in the plan. Look at the fund manager(s), performance, investment objective, holdings, cost (expense ratio and loads) as well as your desired allocation mix.

Nicole
Print the post Back To Top
No. of Recommendations: 0
Thanks Nicole,
Print the post Back To Top
No. of Recommendations: 0
Thanks Nicole, That's very helpful. We'll know more when the 401k website is available next month and we can see if the information you refer to is readily available.
Kevin
Print the post Back To Top
No. of Recommendations: 0
Just to add to Nicole's comment - collective trusts and other "non-registered" investment vehicles used in a 401(k) plan are typically governed under a "collective trust agreement" which is incorporated (by reference) into your specific plan's trust - which means you plan actually has an interest in the underlying assets of the trust (unlike mutual funds, where the only thing you, or rather your plan, owns is the units of the fund itself). Because of this, as a participant, you should 1) be able to see and copy the collective trust agreement (because it is part of the "plan documents") and 2) recieve financial information concerning the trust itself. Each such collective trust is audited annually, and the audit report (with financial information) should be provided to your employer.

In addition, if your plan is intended to be "404(c) compliant" (generally meaning you, and not you employer, are responsible for losses suffered as a result of your investment selections, then certain information MUST be provided to you, so that, theoretically, you can make an informed decision. Ask for the information you want. Some stuff must be provided automatically, some only on request.

Collective trusts are becomming more and more common in 401(k) plans (especially the larger one) because they are more efficient to run (i.e. they don't carry of the overhead of regulatory compliance as a registered mutual fund does), and they are somewhat more flexible (in terms of investment strategy/policy, and in terms of pricing), at the expense of transparency to the investor. I would expect we'll see more uniformity in disclosure if this trend continues.
Print the post Back To Top
No. of Recommendations: 0
Dear mjolah,
all of that is good to know. We'll start digging for the info next month when we get the PIN for access to the 401k website.
Kevin
Print the post Back To Top