Growth Fund of America as long term holding?

[dougie790]

What does everyone think about Growth Fund of America as a core/lone holding in a 401k? I pay no loads so the ER is decent at 0.65 especially given that the 500 index in the plan has as ER of 0.79 (Virtus). I plan on holding this fund alone as long as I am in the plan, unless better options are added. For background the plan also offers:
Keely Small Cap Value A
AIM Reit A
Thornberg International Value R3
Goldman Sachs Mid Cap Value A
Davis New York Venture R
Eaton Vance Large Cap Value R
Federated Kaufman R
Columbia Acorn A
Alliance Balanced A
AIM Global Equity A
Bond Fund of America R3
American Century Inflation-Adjusted Bond
John Hancock Strategic Income R
Wells Fargo Stable Value

Any advice is appreciated.

Thanks,

Dave

 

[FinanceDude]

It is a good longterm large cap growth holding to have. Since you own it in a 401K, there's not upfront load, so the ER is decent, at least in comparison to some of the other choices......

I saw the 401K has an R3 share for Bond Fund of America. That is a retirement class share that has higher ER. I would check to make sure you're not paying an upfront on GFA so you are not surprised.

 

[dougie790]

No Loads

No, we do not pay any of the upfront loads in the plan. I looked at the bond fund of america, but the ER is just too high for a bond fund. Overall its a pretty crappy plan but the match is good so I am just sticking it all in GFA which has a good long term record, a good mix of domestic/international and some fixed income/cash. I hope it will continue its fine performance, allthough I know I am getting in towards the end of the line.

Thanks,

Dave

 

[FinanceDude]

No, we do not pay any of the upfront loads in the plan. I looked at the bond fund of america, but the ER is just too high for a bond fund. Overall its a pretty crappy plan but the match is good so I am just sticking it all in GFA which has a good long term record, a good mix of domestic/international and some fixed income/cash. I hope it will continue its fine performance, allthough I know I am getting in towards the end of the line.

Thanks,

Dave

The reason Bond Fund of America has a high ER is they are using R3 shares, whose ER is like a C share would be, I don't know why they did that. Davis New York Venture and Columbia Acorn are also some decent choices in that plan. GFA is not a true large cap growth fund, it's an all-cap........

 

[dougie790]

The thing I like about GFA is that it is all cap. Davis is a great fund but the R class has too high an ER for them to hold BRK, AIG, AXP, and others for the next thirty years. I can do that myself at much lower expense. Acorn looked ok but I really wanted something more of a value play.

 

[dougie790]

Chris Davis

Chris Davis, while he is a great manager, is too much like his dad in that they love financial stocks a bit too much. I do not think this is a really good time to be caught in them, especially at the prices he probably paid for them.

 

[Art G]

The reason R3 shares are being used is because it's cheaper for the company.
NYVTX (New York Venture) is a great growth fund as well. I own quite a bit for myself. However, it looks like in the recent downturn, Growth Fund of America didn't suffer as badly. JMO

 

[dougie790]

GFA vs. 500 Index

Given that GFA has a lower ER (0.65 vs 0.79) than the index fund in my plan (Virtus Index Fund), is there any advantage to switching over to the index fund instead of GFA?

 

[Art G]

People on this board won't make fun of you.

 

[FinanceDude]

Given that GFA has a lower ER (0.65 vs 0.79) than the index fund in my plan (Virtus Index Fund), is there any advantage to switching over to the index fund instead of GFA?

No...........

 

[dougie790]

Art

Art,
Why would anyone make fun of me? I know there is a bias towards Vanguard and there should be when it comes to mutual funds, but even Mr. Bogle has mentioned that American Funds is an outstanding fund company (well without the load). I think my money is in good hands but in times like these I think it is natural to explore all options available.

 

[Art G]

Sorry Dougie, inside joke. Many people around here seem to think an index fund is the only way to go. I'm behind your choice all the way. That's where a goodly portion of my retirement dollars are.