When I was thinking about rolling over my 401K into my standard IRA, I asked about what institutional class benefits I would be loosing and was told that my cash position was in a "Managed Investment Portfolio" that guaranteed a minimum yield of 1.2% and a stable share value of $1.00. I thought that was a great deal so I sold all the stock funds into the MIP in the 401K and bought an equivalent amount of stock funds in the IRA using the 0% cash position.
Reading the fine print, I see that the "guaranteed" stable $1.00 share price is only something that will be "managed to maintain", but it can break the buck.
I also see that there are certain events such as early retirement withdrawal that might trigger a payout at "mark to market" and not at full balance. That will need some "explaining" when I call them.
The composition, while allowing options and swaps, seems to be primarily U.S. Treasury bonds and GNMA and FNMA paper.
The average annual yield is 1.23%, but the expense ration (gross) is 0.78% and the management fee is 0.58%.
I guess these are my questions:
Is the average yield of 1.23% after the two expenses have been taken out? That is what I have been assuming. That is, if I am happy getting 1.23% then I can ignore the high expense rates.
Do you think I tricked myself into one of those high fee / high profit investment products that they like to sell to stupid investors?
At this point, I am thinking that I might be better off just rolling over to the IRA and investing this position in some sort of short term government bond index fund.
At one point I thought I might be better off buying some treasury bonds directly, but the customer service bond specialist told me that the $70 or so fee for making a bond purchase would wipe out all of my interest on the bond so I should stick with funds. Do any of you buy bonds from Treasury Direct?
Thanks for the advice.
Joe
Reading the fine print, I see that the "guaranteed" stable $1.00 share price is only something that will be "managed to maintain", but it can break the buck.
I also see that there are certain events such as early retirement withdrawal that might trigger a payout at "mark to market" and not at full balance. That will need some "explaining" when I call them.
The composition, while allowing options and swaps, seems to be primarily U.S. Treasury bonds and GNMA and FNMA paper.
The average annual yield is 1.23%, but the expense ration (gross) is 0.78% and the management fee is 0.58%.
I guess these are my questions:
Is the average yield of 1.23% after the two expenses have been taken out? That is what I have been assuming. That is, if I am happy getting 1.23% then I can ignore the high expense rates.
Do you think I tricked myself into one of those high fee / high profit investment products that they like to sell to stupid investors?
At this point, I am thinking that I might be better off just rolling over to the IRA and investing this position in some sort of short term government bond index fund.
At one point I thought I might be better off buying some treasury bonds directly, but the customer service bond specialist told me that the $70 or so fee for making a bond purchase would wipe out all of my interest on the bond so I should stick with funds. Do any of you buy bonds from Treasury Direct?
Thanks for the advice.
Joe