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Our 401k is changing from Vanguard funds to what looks like funds newly created by the 401k administrator, Alight Solutions. The returns on all of these new funds are shown as N/A. Then they listed the returns for the benchmark that each fund is supposed to have. Apparently Alight Solutions is the new name for Aon Hewitt. We really don't know much about this company. The new funds don't even have tickers. It all seems very shady to me.

I wish there was some way to take our existing funds out of there and roll them over to a reputable company. I tried to read through some posts on this, and it looks like we can't because they are not technically terminating the old plan. The only good thing I see in the changes is that they will allow a self-directed brokerage within it. But it sounds like the fees will be eating up any profits from that. Anybody got advice on what to do? TIA.
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AON Hewitt or whatever they call themselves is a reputable company. They are "independent" from any of thebig mutual fund or investment providers and are what I would call - a "pure" recordkeeper (and I'm in the 401(k) business with a competitor of them). I maintain a an account with them from a former employer's 401(k). But they are not money managers. Someone else is the money manager. Your employer has found a way to have custom managed portfolios or Collective Investment Trusts ("CIT") as your investment options. This is, in fact, a legitimate move in that 1) it typically lowers the management fees and "overhead" associated with mutual funds (which are heavily regulated and have lots of fees associated with them and CITs and the like do not); and 2)they can provide more of a long term management focus, which many mutual funds cannot, provide more adaptability (nimbleness) to changing conditions, and provide for different or more targets investment focus because they are not shackled to the regulatory environment surrounding mutual funds.

No, they don't have "tickers" because they are not "mutual funds" or registered security products traded on an exchange. Sounds like these are new funds, so they don't have a track record. The manager probably does - and under DOL regulations, the names of the portfolio managers must be disclosed to you - and you can research them.

Check with your HR folks and get more information.
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mjolah,

Thanks for that detailed reply. I have my 401K with Hewitt and they have been ok for me. I do not like the fact that it is more difficult to track the funds as they don't have ticker symbols. I have had decent returns with them. I think the real savings that are realized are for the benefit of the Employer rather than the Employee.

My company switched from Fidelity to AON Hewitt many years ago.

Mike
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I don't believe the employer is benefiting from the move to separately managed portfolios. The plan fiduciaries (usually the employer or others) have an obligation to pick appropriate investment options - and selecting non-mutual fund options is often a good choice (because of the lower expense ratios)for the participants. The employer gains nothing from this - except perhaps satisfaction that they are fulfilling their fiduciary obligations.

The ticker symbol issue is an issue - but Quicken will download data from Hewitt if set up appropriately. I'm not a big fan of their website - a little difficult to drill down to what I want to know - but it is usable - and it is geared towards long-time horizon investors, not "traders" or those with a shorter time horizon.

I keep my former employer's 401(k) there (and have not, nor will I roll it over to an IRA) because I like the funds and their low (institutional) expense ratios - something I can't get in a (retail) IRA....
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My company used Alight/AonHewitt for several years for our 401k, without issue. Nothing disreputable about them. Just as you describe, we had customized investment "funds", not publicly traded ones. My primary investment has always been the "large company equity fund", effectively an S&P500 index fund, with an expense ratio of just .01%. Just last year the company transitioned to Voya, and all of our "funds" migrated over with us.

I suspect the choice of options available to you is made by your employer. Mine did not offer a self-directed brokerage, yours apparently has chosen to do so - at whatever fee structure they agree to. A change in account custodian/servicer is unlikely to enable a rollover to an IRA as an "in-service" transaction.
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Thanks for the info. None of the information they are providing lists a fund manager's name. I am going to just use the self-directed option. I can't make myself invest in funds with no track record at all. If they do well, we will consider them in a future year.
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I think you are focusing on the "fund" track record and not the skill of the manager. ASK for the manager's name & stats. Their information is public under SEC rules - and under the DOL fee disclosure rules, your employer MUST provide their names. They may be very well establish managers and have an exemplar record - but you don't know unless you research....

And no offense, but ALL of hte studies on the subject indicate that professionally managed funds outperform individuals....
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I can't make myself invest in funds with no track record at all.

Also keep in mind... if one of the options is an index fund, there is NO SKILL INVOLVED. A monkey could manage the fund, and it would still track its benchmark. Unless you're really confident in your stock picking skills, let it ride it an index fund.
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Your employer has found a way to have custom managed portfolios or Collective Investment Trusts ("CIT") as your investment options...
No, they don't have "tickers" because they are not "mutual funds" or registered security products traded on an exchange. Sounds like these are new funds, so they don't have a track record. The manager probably does - and under DOL regulations, the names of the portfolio managers must be disclosed to you - and you can research them.


My company, when coming out of bankruptcy, went the CIT route instead of continuing to use Fidelity mutual funds. The CITs were (apparently) all brand new. We saw "track records," not for these new funds' actual performance (since they were brand new), but for a basket of securities like what the fund would have held had it been around earlier.
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