Re:The best investment advice you'll never get
by a5seo on Monday November 29, 2010 @02:17PM
(#1951415)
good to be suspicious; employer-selected investments are like employer-provided health care, there's a big imbalance in incentives.
2 things to watch: fund expenses and composition
if churning is an issue, it will be reflected in the expense ratio. but if the expense ratio is comparable to actively-managed funds and the fund's composition is index funds, then it might be ok since you're only paying for management services once.
Re:The best investment advice you'll never get
by Natsu on Monday November 29, 2010 @02:47PM
(#1951523)
Oh, the new age-balanced funds are not composed of index funds at all. They're composed of a mix of pretty much everything that they swap out every year for something else. So when you're young, you get mostly stocks, when you're old, they buy more bonds. But they have to trade them around all the time to generate fees.
Anything that didn't generate enough fees got kicked out of the program (unless you opted out). Thankfully, I was in one of the safer funds (the only one currently showing a profit) before the crash. I wish I could move it over to Vanguard now, but it's too late. They didn't give us much warning, and they certainly gave us no time to switch, when we either had to opt out or get enrolled in their shiny new fee-generating fund.
Actually, the people my employer go through just dumped Vanguard and a few other funds and would've automatically enrolled us all in a fund that changes every single year to be "optimum" for your age.
I opted out and I informed my coworkers that there were good reasons to be incredibly suspicious of this move, but I wonder who actually took my advice.
All I could think was that they were going to churn everyone's funds every single year so that they could get huge fees under the guise of "optimizing" our portfolios.