VTIVX vs TRRKX expense ratio fees, is math right?

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Wow Mr Nice you've got some low expense funds in that plan, very nice!

The expense fee for the targeted funds from my employer plan are 0.22%, there's a managed stock fund that is .84%
crazy2.gif
needless to say I stick to index funds and they're still high at .02%.

I go to Vanguard for my targeted retirement fund in my IRA. I figure one of them has to do well.
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OP,

I think you might do well to think about the investments and the investment house that's providing whatever fund you get into...you're always going to get the argument of indexing versus actively managed funds as either will give a better rate of return in a specific cycle or date range.

I would be less concerned about the .26 versus .08 percent expense ratios and more concerned about how they typically invest. If one fund has 15% more stock then it likely won't matter over the course of x years what the expense ratio is versus the cheaper fund. One study I saw had a typical balanced fund showing to outperform some target date funds over several years just because there can be upside ( vs. an index fund ) and downside protection ( vs. a more static target date fund or index fund ).

It's also about what they pay you and not just what they cost. I can never do worse than the benchmark in an index fund but I also can never do better. There's a mindset involved with either style but that doesn't mean that you shouldn't be aware of anything other than the expense ratio and your projected retirement date to make your decision.
 
Originally Posted By: Vuflanovsky
I would be less concerned about the .26 versus .08 percent expense ratios and more concerned about how they typically invest. If one fund has 15% more stock then it likely won't matter over the course of x years what the expense ratio is versus the cheaper fund. One study I saw had a typical balanced fund showing to outperform some target date funds over several years just because there can be upside ( vs. an index fund ) and downside protection ( vs. a more static target date fund or index fund ).

It's also about what they pay you and not just what they cost. I can never do worse than the benchmark in an index fund but I also can never do better. There's a mindset involved with either style but that doesn't mean that you shouldn't be aware of anything other than the expense ratio and your projected retirement date to make your decision.


You have an interesting point. Honest question: what do you think of John Bogle's core thesis on mutual fund costs? He is in the camp of lower costs increase returns in the long run. Do you think his thesis is flawed? Here is a short video on that core idea from John Bogle himself:
 
Al,

I'm not kidding about the 0.08% fee. I'll get a screen shot of the funds and post it.

Maybe my employer negotiated Fidelity to charge low fees to a major corp with 300,000+ employees ?
 
Originally Posted By: Mr Nice
Al,

I'm not kidding about the 0.08% fee. I'll get a screen shot of the funds and post it.

Maybe my employer negotiated Fidelity to charge low fees to a major corp with 300,000+ employees ?

Quite possibly. But for the normal investor their fees are always higher than Vanguard. I am not a Fidelity Hater. I still have an account. I like their website better than Vanguard's.
You don't need to post the screen shot..I believe ya'
 
Originally Posted By: Vuflanovsky
OP,

I think you might do well to think about the investments and the investment house that's providing whatever fund you get into...you're always going to get the argument of indexing versus actively managed funds as either will give a better rate of return in a specific cycle or date range.

I would be less concerned about the .26 versus .08 percent expense ratios and more concerned about how they typically invest. If one fund has 15% more stock then it likely won't matter over the course of x years what the expense ratio is versus the cheaper fund. One study I saw had a typical balanced fund showing to outperform some target date funds over several years just because there can be upside ( vs. an index fund ) and downside protection ( vs. a more static target date fund or index fund ).

It's also about what they pay you and not just what they cost. I can never do worse than the benchmark in an index fund but I also can never do better. There's a mindset involved with either style but that doesn't mean that you shouldn't be aware of anything other than the expense ratio and your projected retirement date to make your decision.


And there's the central point that Jack Bogle makes.

Some funds will do better than the market. But 95% of funds will UNDERPERFORM the market.

I'll let you read his book to understand why...but in the aggregate, funds are the market, so they must arithmetically, and in the aggregate, underperform by the amount of their fees. When correcting for survivor bias (the worst funds close, so you can't see how badly they underperform in your retroactive analysis), it really is 95% of funds that under perform.

So, the question for the small investor, do you think you can pick one of those 5%? Further, that 5% isn't the same funds each year, so you think that you can pick them over and over? Seriously?

If I told you that you could score in the 95th percentile on your SATs, you would be thrilled. You would have over 1500.

So, why aren't you thrilled to perform that well in investing?

The answer has to do with false hope, sales pitches, and inability to accurately predict returns, and greed...but it's a trap...and index investing is the way to avoid it...
 
Originally Posted By: Astro14
Originally Posted By: Vuflanovsky
OP,

I think you might do well to think about the investments and the investment house that's providing whatever fund you get into...you're always going to get the argument of indexing versus actively managed funds as either will give a better rate of return in a specific cycle or date range.

I would be less concerned about the .26 versus .08 percent expense ratios and more concerned about how they typically invest. If one fund has 15% more stock then it likely won't matter over the course of x years what the expense ratio is versus the cheaper fund. One study I saw had a typical balanced fund showing to outperform some target date funds over several years just because there can be upside ( vs. an index fund ) and downside protection ( vs. a more static target date fund or index fund ).

It's also about what they pay you and not just what they cost. I can never do worse than the benchmark in an index fund but I also can never do better. There's a mindset involved with either style but that doesn't mean that you shouldn't be aware of anything other than the expense ratio and your projected retirement date to make your decision.


And there's the central point that Jack Bogle makes.

Some funds will do better than the market. But 95% of funds will UNDERPERFORM the market.

I'll let you read his book to understand why...but in the aggregate, funds are the market, so they must arithmetically, and in the aggregate, underperform by the amount of their fees. When correcting for survivor bias (the worst funds close, so you can't see how badly they underperform in your retroactive analysis), it really is 95% of funds that under perform.

So, the question for the small investor, do you think you can pick one of those 5%? Further, that 5% isn't the same funds each year, so you think that you can pick them over and over? Seriously?

If I told you that you could score in the 95th percentile on your SATs, you would be thrilled. You would have over 1500.

So, why aren't you thrilled to perform that well in investing?

The answer has to do with false hope, sales pitches, and inability to accurately predict returns, and greed...but it's a trap...and index investing is the way to avoid it...


Astro14 is right. As David Swensen states in Unconventional Success: A Fundamental Approach to Personal Investment; uber low cost index funds are the closest thing to a free lunch that exists for an investor.
 
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Mr. Nice, those are some great low fees. My employer-sponsored tax-deferred plan has fees that low, but there are only a few options for investment. From your previous posts, it appears that you've got a multitude of choices.

Mine are:
Large Cap
Small Cap
International
Domestic Bond
Money Market
Target blends of the above

I participate in that plan, as well as a Roth IRA at Vanguard that I set up myself.
 
Here are the Large, Mid and Small Cap fees. No reason why something so basic (Index / Target Date Funds) should have excessive fees.


Fidelity%2099_zps6kegpcbf.png
 
Originally Posted By: SwedishRider
Originally Posted By: Vuflanovsky
I would be less concerned about the .26 versus .08 percent expense ratios and more concerned about how they typically invest. If one fund has 15% more stock then it likely won't matter over the course of x years what the expense ratio is versus the cheaper fund. One study I saw had a typical balanced fund showing to outperform some target date funds over several years just because there can be upside ( vs. an index fund ) and downside protection ( vs. a more static target date fund or index fund ).

It's also about what they pay you and not just what they cost. I can never do worse than the benchmark in an index fund but I also can never do better. There's a mindset involved with either style but that doesn't mean that you shouldn't be aware of anything other than the expense ratio and your projected retirement date to make your decision.


You have an interesting point. Honest question: what do you think of John Bogle's core thesis on mutual fund costs? He is in the camp of lower costs increase returns in the long run. Do you think his thesis is flawed? Here is a short video on that core idea from John Bogle himself:



I'm not an indexer per se and I have nothing against John Bogle but I prefer to invest on my own terms which typically means ( by interest and necessity ) being more involved in the funds than the average "set and forget" indexer. The truth is that in some years the indexers will make more and in others the managed fund group will make more. However, I've never found this to "even out" if you follow your funds more actively. I'm far from a day trader and generally only make small tweaks on occasion, but there's something to be said about following fund managers who can beat the benchmark three out of five years or better.

If 80% of all fund managers don't beat their benchmark that doesn't mean that I give up and just index. That means I make at least somewhat of a concerted effort to understand the funds of the 15-20% who do match or beat their benchmarks consistently. For folks that are more concerned about a .06% vs. a .08% expense ratio, that concept might go against their grain. I can tell you that my mutual fund investments since 2009 have beaten their respective benchmarks most years...albeit not by much in some cases and approaching 10% in others. It's a different mindset ( for example ) if you believe in particular fund managers ( and by extension their funds ) versus believing in indexing as a long term concept. If it's only left to the index or the fund manager then that will give one result...not the ultimate result if you're making tweaks and/or changes along the way. Personally, I view indexing as somewhat fatalistic on that count versus being more involved with your money. Again, it's a mindset and there are arguments on both sides. That mindset might be altered again if you're using a self-directed group of funds vs. being in a company 401(k) plan that only gives a few choices.

I'm probably one of the least emotional people you'll ever meet with regard to the stock market so that's not much of a problem. However, that doesn't mean that I just peg my money to a benchmark when I could be gaining more in say a 2-3 year cycle where index investing isn't favored. My point was that it potentially is more important what you're making in the fund over 10 years, and what if anything you do regarding it, than what the expense ratio is over that period. Unless I'm mistaken, Vanguard still has more actively managed funds than index funds. Is that somehow hypocritical or do they understand that they both can work in the right circumstance??
 
^
Okay, so you don't argue that MOST active funds will actually UNDERPERFORM their benchmark. Now you're quite limited in the "winning" funds, and you assume that you can predict ahead of time, which ones [manager] will outperform?!?

That's a pretty neat trick. If you could do that successfully, you could be the fund manager and be making millions.


Your SAVINGS RATE is much more important than which fund you choose (assuming low priced index funds). 15% savings rate will end up with much more than a 10% savings rate, even if you choose a "wrong" fund and underperform by 0.5%.
 
Ah....

So, you're not only able to pick those winning managers in advance, but you're also able to time the market, to know when to get in and out?

The truth is that despite your belief/claim that active managers will beat the market - because of their fees, only five percent do. It's fantasy to think that you can consistently pick them, just like it's fantasy to think that they can consistently out perform.

"Since 2009" is a ridiculously short period, without any major market corrections, in which even a clown could make money. Further, you've not accounted for fees...they're what eats up the return, and causes the underperform...so, I wouldn't take your experience as representative, or statistically significant.

With a few more decades, and a few market corrections, under your belt...then you'll have some perspective...and some credibility.
 
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GE did well in setting up those investments for its employees. I'm jealous. Can you buy individual stocks in that account too?
 
Bandito440,

I can't buy individual stocks in this 401K retirement account.
I do have a GE company pension, GE voluntary pension and IRA.
 
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