There was a report this morning that Ford is dropping the popular Fidelity Magellan fund, in addition to several others, from the company’s 401(k) selections due to poor performance. After the eliminations, Ford still offers 30 mutual funds.
My company is a financial services company, so you would think their fund choices rival the best 401(k)s. However, they only offer a small selection of funds, most of which are managed by the company’s mutual fund division. They are definitely not the lowest-cost options out there.
Here are all of my options. I don’t include the full names of most of the funds because I’d rather not disclose my employer. Seriously.
- Specialty – Real Estate:: Real Estate Fund
- Balanced – Blend: Active Allocation Fund
- Large Cap Stock – Value: American Century Income & Growth Fund
- Large Cap Stock – Growth: Growth Fund
- Large Cap Stock – Blend: Core Equity Account
- Large Cap Stock – Blend: Stock Index Fund (expense ratio: 0.3%)
- Mid Cap Stock – Value: Artisan Mid Cap Value
- Mid Cap Stock – Growth: U.S. Emerging Growth Fund
- Small Cap Stock – Blend: Small Company Stock Account
- International Stock – Blend: International Equity Fund
- Stable Value: Fixed Rate Fund
- Fixed Income – Govn’t Securities: Fidelity Advisor Government Investment Fund
- Fixed Income – High Yield: American High-Income Trust
- Company Stock: Common Stock Fund
I’d expect more options from a financial services company, but I assume the 401(k) is a great way for the company to make money off its employees through management and expense fees. For example, the new real estate fund that I chose to begin investing in earlier this year recently announced it was adding a management fee of 1.5% on top of expenses.
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1:36 pm (reply)
This is why I wish company 401Ks were organized like self-employed 401Ks: you manage your 401K account and the company just direct deposit the money into a brokerage fund that you open. When you join a company, you give them your routing number, and funding your 401K would be just like funding your paycheck with direct deposit. Matching and “vesting” would be a bit more tricky, but could be worked out.
The current scheme is silly.
1:40 pm (reply)
Flexo, please send me an e-mail. Need to tell you something.
Thanks.
3:06 pm (reply)
I guess we work for the same company and no I’m not happy with our line up. The expense ratios on some of these funds are ridiculous. 3 of the funds don’t even disclose the ratio so who knows how much they’re taking off the top. Don’t worry Flexo, your secret is safe with me…
4:36 pm (reply)
Thanks for the 1.5% tip on the realestate fund.. I guess I need to go back to the stock index fund.
4:40 pm (reply)
JP: The RE fund management fee wasn’t really “announced,” it was hidden in the quarterly performance update that is only available online and rarely checked by anyone, including me.
4:59 pm (reply)
0.37% to 1.5%... NICE !! I wanted international exposure and it’s costing me 1.32%. I need to rethink my 401k allocation yet again. I have a mutual fund and Roth IRA account with T.rowe price so I may need to move my international exposure there.