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Can I switch my money to Vanguard?
Old 08-09-2011, 10:48 PM   #1
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Can I switch my money to Vanguard?

I'm going over the Fidelity plan my current employer offers, and comparing expense ratios for Vanguard equivalents. Fidelity's total market index is a bit cheaper than Vanguard's (.10% vs .18%), but otherwise Vanguard trounces the Fidelity expense ratios.
Is it possible for me to transfer money from Fidelity into Vanguard, while keeping it in a 401k?

Tim
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Old 08-09-2011, 10:59 PM   #2
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Quote:
Originally Posted by nuisance View Post
I'm going over the Fidelity plan my current employer offers, and comparing expense ratios for Vanguard equivalents. Fidelity's total market index is a bit cheaper than Vanguard's (.10% vs .18%), but otherwise Vanguard trounces the Fidelity expense ratios.
Is it possible for me to transfer money from Fidelity into Vanguard, while keeping it in a 401k?

Tim
If your employer offers Vanguard, then it's easy. If your employer doesn't, then I don't know of a way (short of quitting your job and rolling everything into an IRA with Vanguard). But I'm not an expert.

You are right to be looking at costs, but at least Fidelity's tend to be lower than those of many other companies. Things could be worse.

Some folks make the best of situation like yours by optimizing things across all their accounts (IRA, 401K, taxable). For instance, you could go with the low-cost Fidelity Total Market Index in your 401K (since it's low cost) as your "base", and then do the smaller parts of your asset allocation (foreign, small, value, etc) in low-cost Vanguard accounts held in your IRA.
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Old 08-09-2011, 11:10 PM   #3
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Is it possible for me to transfer money from Fidelity into Vanguard, while keeping it in a 401k?
If you are the employer, yes. If you are only an employee, no.
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Old 08-10-2011, 05:44 AM   #4
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Do they offer the Fidelity Contrafund?

If so, then don't be penny wise and pound foolish.
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Old 08-10-2011, 07:11 AM   #5
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...but otherwise Vanguard trounces the Fidelity expense ratios.
Regardless if you can transfer or not, I'll just add that fund expenses are only part of consideration of selection of a fund.

I'm no BH (e.g. exclusively VG and a supporter due to expenses, above all else); DW/me have funds at both FIDO and VG. Why? Simply that some of the funds (of each company) meet our goals.

To make this simple, looking at our joint portfolio a/o yesterday's close, using M* returns (which include costs), our top six funds (in order of YTD returns, high to low) are:

Vanguard Intermediate Term
Fidelity GNMA
Vanguard GNMA
Fidelity Total Bond
Fidelity Intermediate Term
Vanguard Health Care

Of course, bond funds (regardless of company) are doing well at this moment. Earlier this year, that was not the case when our top two holdings were Neuberger Berman (via FIDO) and VG Health Care; again a split between both companies.

IMHO, look at the total costs, but also combine those costs with returns over a specific time period (for us, it's five years as a minimum hold), along with other considerations (such as US vs. Global, Sector funds vs. strictly index, etc.)

Cost matter, but it is not the only artifact that you should consider when formulating and maintaining funds in your portfolio.

Assuming that you can't transfer your 401(k) (I did a partial "in-service" when I turned 55, but that all depends on your company/plan rules), maybe another idea is to find out who is on the committee that selects funds. You might want to present your case to them and see if you could go to FIDO (additional or replacements) that are lower cost, such as the Spartan Funds:

Fidelity Investments

Just my $.02.
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Old 08-10-2011, 10:27 AM   #6
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Quote:
Originally Posted by nuisance View Post
I'm going over the Fidelity plan my current employer offers, and comparing expense ratios for Vanguard equivalents. Fidelity's total market index is a bit cheaper than Vanguard's (.10% vs .18%), but otherwise Vanguard trounces the Fidelity expense ratios.
Is it possible for me to transfer money from Fidelity into Vanguard, while keeping it in a 401k?

Tim
My Megacorp's 401K was with Fidelity. The FA's that hung around Megacorp's potential retirees like buzzards pushed an in-service rollover where the employee turned the proceeds of the rollover to the FA who would do great things with it. I ran the other way, but reading the fine print in the 401K prospectus, I discovered this option was available to anyone.

When I retired I rolled my lump sum pension payout to a rollover IRA with Vanguard where DW and I already had our Roth IRA's. I rolled my 401K with Fidelity to a rollover IRA with Fidelity which gives me access to all of Fidelity's funds. So far, I am happy with this arrangement.
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Old 08-10-2011, 09:57 PM   #7
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Thanks for answering the original question. As far as funds go, I was looking at the following funds, with the Fidelity ones being limited by the choices available to me:
cash FID RETIRE MMKT0.42%Vanguard Prime Money Market Fund0.23%
bonds FID TOTAL BOND0.45%Vanguard Total Bond Market Index Fund0.22%
real estate FID REAL ESTATE INVS0.90%Vanguard REIT Index Fund0.26%
US stocks SPTN EXT MKT IDX INV0.10%Total Stock Market Index Fund0.18%
  SPTN TOT MKT IDX INV0.10%  
international stocks FID INTL CAP APPREC1.09%Total International Stock Index Fund0.26%
  FID INTL DISCOVERY1.05%  

Not exact matches, but roughly the asset classes I'm looking at. Per some wisdom on the board here, other places, and Malkiel's book, I don't believe anybody is any better at picking stocks than anybody else, so I prefer just to index and rebalance. With that in mind, past performance is irrelevant to my choices.

The Fidelity Contrafund is not offered. The only 2 Spartan funds are the ones listed above.

I like the suggestion of seeing if my company can get a few funds added to the options. That seems more likely to happen than that they'll switch over to Vanguard. :-)

Tim
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