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I tnink I need help
Old 10-31-2004, 05:49 AM   #1
 
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I tnink I need help

I've been reading all of the posts here and now I'm really having a fit. I started looking at the expense ratios on my various investments. My current 403B is with Fidelity. It has 100k, which is about 12% of our portfolio. Just as an example, one of my funds is Fidelity Value Strategy (FSLSX). YTD return is .03%. The management fee is .58% and expense ratio is .84%. Then I see that the total cummulative return YTD is -1.40%, which works out to .03% - .58% - .84%.

Am I understanding the fees above correctly? The 1 year return on the same fund is 12.64%, which seems excellent to me.

I have Vanguard Funds available to me also, so I'm going to research them.

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Re: I tnink I need help
Old 10-31-2004, 07:03 AM   #2
 
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Re: I tnink I need help

I think you are in the ballpark. I looked at Yahoo's Financial site for this fund. It gives the expense ratio as .76%

It does match your number of -1.40% for YTD Return. As well as your number for the 1 year return. I would research all your funds on the same site as it may be easier to compare.
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Re: I tnink I need help
Old 10-31-2004, 07:41 AM   #3
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Re: I tnink I need help

High management fees stink!

(Am I the only one that thinks "Death To Smoochie!!!" every time they see this posters name? )
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Re: I tnink I need help
Old 10-31-2004, 12:12 PM   #4
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Re: I tnink I need help

No, I think Death to Smoothie too. Only I didn't see the movie....I don't like sad movies.
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Re: I tnink I need help
Old 10-31-2004, 12:16 PM   #5
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Re: I tnink I need help

Smochie,

I put a post on the Vanguard Diehard forum a while ago.

http://socialize.morningstar.com/New...=108080#629363

Basically I was trying to figure out if it made sense to fund a 403b with a higher expenses or put the money into an after tax account at Vanguard. It turned out that once they reduced the fees it worked out a little better to fund the 403b.

-helen
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Re: I tnink I need help
Old 10-31-2004, 01:08 PM   #6
 
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Re: I tnink I need help

YTD Return (10/29/2004): 0.52%

I think this is the return after all the expenses.
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Re: I tnink I need help
Old 10-31-2004, 07:15 PM   #7
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Re: I tnink I need help

Under 1% total expense ratio with no upfront loads is a very reasonable expense for an actively managed stock fund. *Stocks arn't doing so great this year, so dont get too bent out of shape that your return goes negative when you take the expense out.

Real humans simply cost more than trained monkeys. *.2% for a monkey, under 1% for a human. *Take your pick.
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Re: I tnink I need help
Old 10-31-2004, 08:37 PM   #8
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Re: I tnink I need help

Vanguard Wellesley Admiral shares - .20% administration fee...fully managed fund. 8.72% return YTD after expenses.

They're out there...
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Re: I tnink I need help
Old 11-01-2004, 04:09 AM   #9
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Re: I tnink I need help

Quote:
Vanguard Wellesley Admiral shares - .20% administration fee...fully managed fund.
... with an initial deposit requirement of 250K dollars.

I see the non-admiral one is .3% expense ratio, which is good and fits my recommendation of below 1% for active management.

I look at about 10-15 different factors when i select a mutual fund. *Long as i see below 1% expense ratio and no load, that's a "check' on that one factor, and i move on to the other 9-14. *

There are some really wonderful funds out there with .65-.99% expense ratio that it would be a shame to eliminate due to index bias. *

The majority of index funds beat active management ones. *But those statistics include all the consistenty poor performers, and the ones that charge outrageous expense ratios (2-3% or more) with loads on top of that. *Of course its hard to beat an index when you're 3% in the hole from the getgo!

I will admit i am considering indexing for an emerging market fund. I just dont have a reasonably priced alternative with the fund companies i participate in now. They want about 2% or more expense ratio for the privaledge.
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Re: I tnink I need help
Old 11-01-2004, 05:00 PM   #10
 
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Re: I tnink I need help

Vanguard Wellesley Admiral

I looked at that one yesterday. I am going to be talking to a Vangaurd rep next week, so I'll do some more investigating.

Thank you for the advice!
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Re: I tnink I need help
Old 11-02-2004, 12:12 PM   #11
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Re: I tnink I need help

If you want something racier than Wellesley, check out Wellington. Both invest in large cap value stocks and intermediate bonds, managed by the same company for vanguard. Wellesley is bond heavy, Wellington is stock heavy...about 35/65 stock/bond for wellesley, about 60/40 stock/bond for wellington. Wellington charges a little more than wellesley.

I agree one should not eliminate funds from consideration due to management fees, but I havent seen any funds that charge over .5% that consistently do better than ones that charge half that or less.

Dodge and Cox Balanced (dodbx) at ~.54%, Wellesley and Wellington are the only funds I've seen with a considerable track records that do well in "all seasons". Oakmarks balanced is good at ~1%, but not as good as dodbx, wellesley or wellington for less than half the management cost.
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Re: I tnink I need help
Old 11-02-2004, 01:52 PM   #12
 
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Re: I tnink I need help

Thanks, TH. I may just divide what I have and my future contribution (hopefully not for too many more years) between the 2 Vanguard funds.
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Re: I tnink I need help
Old 11-02-2004, 06:00 PM   #13
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Re: I tnink I need help

A few years ago after some extensive snooping, evaluating and consideration, I came to the conclusion that splitting ones money 50% in wellesley and 50% in wellington wouldnt be too bad of a mix...brings you to roughly 50% stocks and 50% bonds.

I later found out this is a well known recommendation, particularly among 'old money' investors. Wellington was one of the first mutual funds, launching in the 1920's, so a lot of people invested in that a long time ago, and for a long time. When Wellesley launched in 1970, many of those were ripe for something a little more conservative and started shifting money from wellington to wellesley.
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Re: I tnink I need help
Old 11-03-2004, 04:12 AM   #14
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Re: I tnink I need help

Yep - I agree with TH. The version I saw was Wellesley/Dodge and Cox Balanced(closed to new investors) - no down years for the last ten.

Conservative and attempts to capture the persistence of the value premium thru the decades.

A Wellesley/Wellington should work - if you are ER'd or have a short span time to ER (under say 15 yrs) or are just plain conservative or 'heaven forbide' - a dirty bargin hunter/market timer waiting for better valuations.

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Re: I tnink I need help
Old 11-03-2004, 04:43 AM   #15
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Re: I tnink I need help

Smoochie,
If you are looking for a good value fund to throw into the mix, I have always been partial to Vanguard Windsor II. *It outperforms the US Large Value Index by a percent or so each year, and charges about .45% annual fee. Return is about 8.5% ytd, and yield is 2.1%. (Sounds a lot stronger than your Fidelity value fund, this might be one of those teams that defies the averages over the long run).

Because value investments appear and disappear as a company's stock price rises and falls in response to its rising and falling fortunes, (value opportunities arise when the price has fallen out of proportion with the company's bad news, or failed to rise in proportion to the good news), I feel that value funds are the one place where it is worth paying for an active manager. *Value indexes get set annually, and use book-to-market type screens to determine what is a value stock (High Book-to-Market ratio). *Active value managers know the times to buy and sell occur in windows, so a value fund will look different from a value index.

You also hope your value manager can sometimes differentiate between an Enron and a Tyco -- the former looked real cheap for awhile and kept getting cheaper- *all the way to zero. *(Also known as a 'value trap'.) * The latter revived and turned into a good investment for brave value players.

Whether you go the Wellesely/Wellington/Dodge Cox route, or throw some Windsor II into the mix, you are on firm ground with any of these approaches.

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Re: I tnink I need help
Old 11-03-2004, 06:15 AM   #16
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Re: I tnink I need help

I recommend against Value at this time, with the exception of energy. Value stocks have a remarkable runup over the past 5 years or so, but if you consult value vs growth comparisons over several decades, it is clear that they ocilllate back and forth. Growth is long overdue.

Herd mentality in the market is very dangerous, and buying value now is showing up to the party when everyone else is walking back out to their cars. America seems to be real upbeat after the election, and with Iraq coming to a close, I forsee growth being the winner over the next two years.
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Re: I tnink I need help
Old 11-03-2004, 06:40 AM   #17
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Re: I tnink I need help

Quote:
America seems to be real upbeat after the election, and with Iraq coming to a close, I forsee growth being the winner over the next two years.
You and I must live in different countries.
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Old 11-03-2004, 07:12 AM   #18
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Re: I tnink I need help

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You and I must live in different countries.
Its possible? *In our country, they have this neat thing called the internet, and when you type msn.com, you see the dow is up 147 points this morning. * A little Market 101; the dow doesn't break 100 points in 20 minutes when our country is in a state of gloom.

I voted for Kerry so go be bitter to someone else.
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Re: I tnink I need help
Old 11-03-2004, 07:49 AM   #19
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Re: I tnink I need help

Quote:

Its possible? In our country, they have this neat thing called the internet, and when you type msn.com, you see the dow is up 147 points this morning. A little Market 101; the dow doesn't break 100 points in 20 minutes when our country is in a state of gloom.

I voted for Kerry so go be bitter to someone else.

I am planning on doing exactly that this weekend---we're getting together with friends. I don't have a clue about the market and why it does what it does, but in my neck of the woods we are far from upbeat. I also can't believe that the war in Iraq is coming to a close.

But I will leave this alone--I know that this board has been relatively careful about getting into messy political discussions.
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Re: I tnink I need help
Old 11-03-2004, 11:48 AM   #20
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Re: I tnink I need help

Quote:

In our country, they have this neat thing called the internet, and when you type msn.com, you see the dow is up 147 points this morning. * A little Market 101; *the dow doesn't break 100 points in 20 minutes when our country is in a state of gloom.

I voted for Kerry so go be bitter to someone else.
Aside from your overall sarcastic tone there is a flaw in your reasoning. The Dow Jones Average is not the country.

Reading what some voters said about why they voted as they did I can only conclude that there has been a pretty thorough logic disconnect in many of our citizens. Maybe the happy DOW is equally meaningless, just one more happy-talk noise.

Mikey
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