Fidelity BrokerageLink outside 401k funds

[etscch01]

Hey everyone, new general pediatrician hoping to get some advice about 401k/457/HSA portfolio planning. I currently have both a 401k and 457 plan through Fidelity (maxing out both, Roth in 401k). Both of these plans have the same fund options. Wanted to see if anyone had any experience with the Fidelity BrokerageLink and investing through this rather than the traditional funds? Ideally I'd like to be in all low cost Vanguard index funds, but can't get there with the current limited plan offerings and don't like several of the expense ratios I'm stuck with. I was thinking about using the BrokerageLink to invest in "near" Vanguard equivalent Fidelity index funds (found a list on Bogleheads) in order to avoid the trading feeds if I were to go the Vanguard route. Is it worth it to change my portfolio in the Roth 401k knowing that I don't have the same option with BrokerageLink for the money in the 457 and am stuck with the plan funds? Would there be any advantages to asset allocating differently between the Roth 401k and 457? ie) one more bond/alternative heavy than the other, etc?

To complete the picture, I've also got an HSA that I have been investing monthly now that I'm above the 2k minimum balance. I have broader fund list that includes many Vanguard index funds. I've set this up to be ultra aggressive.

Thanks in advance for your reply. Very grateful for so many experienced docs looking out for one another!

 

Chris

[nachos31]

etscch01 wrote:

Is it worth it to change my portfolio in the Roth 401k knowing that I don’t have the same option with BrokerageLink

Click to expand...

It might be easier to help out if we know what your current plan options (non-BrokerageLink) options are--give the name of the fund and the expense ratio for each option.

In general, since your Roth 401k sounds like it has limited options, you would probably choose the lowest cost option(s) for a fund (or funds) that fit your asset allocation and then round out the rest of the asset allocation in the 457 with the wider options of the BrokerageLink.

Have you thought about/decided on an asset allocation? Also do you have any IRAs or taxable accounts in the picture?

[DMFA]

The major index funds are almost the exact same between Fido and VG, with Fido's actually having 0.005% lower ERs in some cases. FSTVX = VTSAX, FUSVX = VFIAX, and on down the line. Their alpha, Sharpe, r², and (most importantly imo) net returns are almost identical.

Now, if you're getting beyond the standard backbone of total US, total int'l, and total bond, then VG has more lower-cost options, but you probably don't need to be that granular in your portfolio.

Like nachos said, it depends on what specific options you have available.

[etscch01]

Hey guys, appreciate your responses. I have listed the available plan funds. These are both the same in the 401k and 457b plans. However, I can only access BrokerageLink through the 401k plan so am stuck with the plan funds within the 457b. I also listed my allocation beside those that I am currently invested in. Overall this comes out to 80/20 stock/bond with 25% in international stock. These are allocated the exact same way in both the 401k and 457b. My HSA is set up to be 75/25 stock/alternatives. I added a table at the bottom with those specifics as well. I do not have any IRA's or taxable accounts in the picture as of yet. I guess the question is do things get too complicated going through BrokerageLink knowing I'm stuck with the below funds in the 457b? I'm definitely willing to spend extra time and have grown my investing knowledge quite a bit lately, but am admittedly still quite a novice.

Large stock

Vang inst index plus – VIIIX – 0.02% - 14

Fid contrafund K – FCNKX - 0.61% - 10

Vang FTSE soc idx is – VFTNX - 0.12% - 8

ABF Lg Cap value idx - AADEX - 0.59% - 0

Mid stock

Vang ext mkt idx isp – VEMPX - 12

Small stock

Fid small cap growth – FCPGX - 0.05% - 10

ALZGI NFJ SMCPVLIS - PSVIX - 0.83% - 0

International

AF europacific large growth – REREX - 0.85% - 13

Vang dev mkt idx is - VTMNX - 0.07% - 13

Bond

Pimco total return inst class - PTTRX - 0.46% - 10

Vang total bond mkt idx fund - VBTIX - 0.05% - 10

 

There are also all the Fidelity target date retirement funds available in addition to the above.

 

Health Equity	Name	Allocation	Exp Ratio
Large	VVIAX	14	0.08
Mid	VMVAX	16	0.08
Small	VSIAX	18	0.08
Int Emerging	RNWEX	13	1
Int Large	MINGX	13	1.01
Alt REIT	VGSNX	13	0.1
Alt Natural Resources	VMIAX	13	0.1
		100
Stock		74
Alternatives		26

Thanks again for all the great advice!

 

Chris

[DMFA]

etscch01 wrote:

Hey guys, appreciate your responses. I have listed the available plan funds. These are both the same in the 401k and 457b plans. However, I can only access BrokerageLink through the 401k plan so am stuck with the plan funds within the 457b. I also listed my allocation beside those that I am currently invested in. Overall this comes out to 80/20 stock/bond with 25% in international stock. These are allocated the exact same way in both the 401k and 457b. My HSA is set up to be 75/25 stock/alternatives. I added a table at the bottom with those specifics as well. I do not have any IRA’s or taxable accounts in the picture as of yet. I guess the question is do things get too complicated going through BrokerageLink knowing I’m stuck with the below funds in the 457b? I’m definitely willing to spend extra time and have grown my investing knowledge quite a bit lately, but am admittedly still quite a novice.

Large stock

Vang inst index plus – VIIIX – 0.02% – 14 [this is practically free, completely tracks the S&P 500 (r² = 1.00), great choice for your large portion]

Fid contrafund K – FCNKX – 0.61% – 10 [if you've got better options, you don't need to pay 0.61%, although I admit I don't hate the Contrafund as much as other active funds]

Vang FTSE soc idx is – VFTNX – 0.12% – 8 [you don't need this if you've got VIIIX, just another large growth-tilted blend with higher risk and less return than the S&P 500]

ABF Lg Cap value idx – AADEX – 0.59% – 0 [again, surplus to requirement, an expensive large value-tilted blend with no better return than the 500]

Mid stock

Vang ext mkt idx isp – VEMPX – 0.05% - 12 [super-cheap mid/small blend.  This is how you round-out your domestic equities to mirror the total stock market; its 4/45/50 large/mid/small mix means that a 4:1 ratio with VIIIX (86/14/0) will give you 70/20/10, which is TSM]

Small stock

Fid small cap growth – FCPGX – 0.05% – 10 [are you sure that's the ER?  Morningstar says it's 1.11%, in which case I wouldn't pay it and just use VEMPX. Small caps have beaten the S&P 500 recently, but to overweight them solely because of that is a gambler's fallacy.  Still, small caps have more room for growth than large at the risk of some stability]

ALZGI NFJ SMCPVLIS – PSVIX – 0.83% – 0 [I don't see the point if you've got a cheaper, better-performing small cap fund]

International

AF europacific large growth – REREX – 0.85% – 13 [It's pretty imperfect, despite returns in the top third of its class and staying above water when other int'l funds have lost, it isn't great at capturing upside.  You're better off with VTMNX imo]

Vang dev mkt idx is – VTMNX – 0.07% – 13 [top-third returns with very low cost.  This should be your entire int'l allocation in here, since you don't have an emerging markets option]

Bond

Pimco total return inst class – PTTRX – 0.46% – 10 [if you want stability from bonds, this isn't a great choice since it tries to earn with them, probably better off earning with equities]

Vang total bond mkt idx fund – VBTIX – 0.05% – 10 [gold standard for bond funds, r² = 99.32 for the Barclay's index]

 

There are also all the Fidelity target date retirement funds available in addition to the above. [don't bother with the fees and set allocations, imo]

 

Health Equity	Name	Allocation	Exp Ratio
Large [86/14/0]	VVIAX	14	0.08
Mid [10/90/0]	VMVAX	16	0.08
Small [0/40/60]	VSIAX	18	0.08
Int Emerging	RNWEX	13	1 [too high imo]
Int Large	MINGX	13	1.01 [too high imo]
Alt REIT	VGSNX	13	0.1
Alt Natural Resources	VMIAX	13	0.1
		100
Stock		74
Alternatives		26

[Natural resources can be very volatile and you're basically just looking at large caps (Dow, DuPont, Monsanto) anyway.  Again, I don't think you need the mid-cap fund in there unless you specifically want to weight it more highly.  Putting half your internationals into emerging is a p big risk, and those are some very expensive funds for international. What are your other international options in your HSA?  The other thought to your HSA is the possibility of needing some if it actually for healthcare; you might want to consider keeping slightly more "stable" funds in there like some bonds, if you think you'll be holding them there, or with large-weighted US stocks like 500 or TSM since their gains will be either untaxed if drawn on healthcare.]

Thanks again for all the great advice! [lol]

 

Chris

Click to expand...

Overall it seems un-necessarily granular and fragmented.  You can basically have the same diversification and exposure using fewer funds.

401k/457b:

• US stock: VIIIX and VEMPX, tilt however you want (for reference, 4:1 mirrors total stock market)


• Int'l stock: VTMNX


• Bond: VBTIX

HSA:

• US stock: take your pick of your (good) available options in whatever large/mid/small you'd like, noting their allocations above and remembering that TSM is 70/20/10 (just for reference)


• Int'l stock: pick a low-cost int'l index +/- an emerging markets fund.  If you want more emergings, remember that (for reference) total int'l funds are usually about 15% emerging.


• Non-stock equities: the REIT fund I like, the materials I'm not so sure since it's p much large stocks


• Bond: take your pick, would prob just do VBTLX or something equivalent

This is purely my opinion.  I won't tell you how to allocate between stocks/bonds, US/int'l, etc since I think that's purely up to you.  I'm not a rigid opponent of active funds (I actually do hold a couple, in small percentages, for some niche portions of my portfolio), but if you have a very strong inexpensive alternative (of which you have several), I think you should take it.