Gyroscopic Investing

Many of you might recall a number of topics I started here and in the Stocks section at different times over the last 3 years whining about our bad 401k plan. Things changed just as I gave up on my eternal battle for a better plan. It took a loss of a number of key employees, creating a company profile on Glassdoor, asking discreetly my colleagues for reviews (including benefits reviews specifically), and finally an honest one-on-one talk with the CEO.


We're moving to Employee Fiduciary and yesterday night I started filling out an 40-row Excel sheet with the mutual fund names that we (well, I  [size=x-small]) want to offer in the plan.[/size][size=x-small]40 funds surely is more than enough and besides that there will be an option to use a brokerage window through TD Ameritrade. Below is the list of funds I'd like to include. For funds available in Admiral share class we will be using those. [/size]

Are there any other Vanguard or non-Vanguard funds worth consideration? Please share your thoughts.



Ticker  Fund Name
 
VMMXX  Vanguard Prime Money Market   
VBINX  Vanguard Balanced Index Fund 
VASGX  Vanguard LifeStrategy Growth Fund   
VSMGX  Vanguard LifeStrategy Moderate Growth Fund 
VSCGX  Vanguard LifeStrategy Conservative Growth Fund 
VASIX  Vanguard LifeStrategy Income Fund 
VTSMX  Vanguard Total Stock Market Index Fund 
VDIGX  Vanguard Dividend Growth Fund   
VASVX  Vanguard Selected Value Fund   
VEXMX  Vanguard Extended Market Index 
VIMSX  Vanguard Mid-Cap Index Fund 
VMVIX  Vanguard Mid-Cap Value Index Fund 
VMGIX  Vanguard Mid-Cap Growth Index Fund 
NAESX  Vanguard Small-Cap Index Fund 
VISVX  Vanguard Small-Cap Value Index Fund 
VISGX  Vanguard Small-Cap Growth Index Fund 
VEIEX  Vanguard Emerging Markets Stock Index Fund 
VTWSX  Vanguard Total World Stock Index Fund 
VGTSX  Vanguard Total International Stock Index Fund 
VFSVX  Vanguard FTSE All-World ex-US Sm-Cap Index Fund 
VGHCX  Vanguard Health Care Fund 
VGSIX  Vanguard REIT Index Fund 
VGENX  Vanguard Energy Fund   
VBMFX  Vanguard Total Bond Market Index Fund 
VTIBX  Vanguard Total International Bond Index Fund   
VUSTX  Vanguard Long-Term Treasury Fund 
VFITX  Vanguard Intermediate-Term Treasury Fund   
VFISX  Vanguard Short-Term Treasury Fund 
VWEHX  Vanguard High-Yield Corporate Fund 
VFSTX  Vanguard Short-Term Investment-Grade Fund   
VWINX  Vanguard Wellesley Income Fund   
VWELX  Vanguard Wellington Fund

Desert wrote: Congratulations for continuing to fight for a good 401k.  The choices you listed sound great, and I can't think of any other Vanguard choices I'd include.  I'm curious, what will the total ER be for a TSM fund in your new 401k?

We won't get the institutional shares unfortunately,  so it'll be Admiral l shares.

foglifter wrote:Are there any other Vanguard or non-Vanguard funds worth consideration? Please share your thoughts.

Of course!  The funds that would be necessary to make a Permanent Portfolio!  So, top needs:

TLT
GLD / IAU / SGOL
SHV / SHY, though VFISX may serve the same purposes close enough.

You would also do well to select 3 or 4 other Total Stock Market funds from different companies, so people can do diversification, as well as at least one plain S&P 500 fund.  This also weights/emphasizes "the right choice" for stock funds -- if someone is picking at random, they're more likely to get something good.  Or, more likely, if they're looking through the list they'll see, "There sure are a lot of those; the bright boys in back must think they're important, I'd better get at least one."
Also a Dow Jones fund, and at least one other large-cap fund.  You have a zillion small cap funds, but no large-cap ones that I see (maybe I missed them).
A commodities fund would probably be a popular option.  Though 401ks rarely include a pure gold fund, they often include a commodities fund.  People like them.  Your plan should have both.
You could have a silver fund, too, for that matter.

I need to talk to our HR manager about our poor 401(k) choices. Really high fees for generic things. Ironically... our HSA is much better, it's a different provider.

Congratulations foglifter!  That is some serious perseveration.

You can use VUSTX, VTSMX, and either vanguard prime or VFISX plus the brokerage window to make up your PP.  You might want to get the Vanguard Treasury MM included - it's closed to new investors now but one day (over the rainbow) it will reopen.

I also suggest including the target date funds.  Not everyone is comfortable managing investments, so it would be useful to include a full range of the one stop shopping funds.

Desert wrote: VUSTX is fine for long treasuries, with an average maturity of 24.7 years.

Really?  I thought TLT was the best, the strictest about having just US Treasuries and nothing else.  No longer the case?

LC475 wrote:

Desert wrote: VUSTX is fine for long treasuries, with an average maturity of 24.7 years.

Really?  I thought TLT was the best, the strictest about having just US Treasuries and nothing else.  No longer the case?

See http://gyroscopicinvesting.com/forum/bo ... d-harmful/

So even though the claim is TLT holds "only" 20+ year treasuries, it actually holds about 60% 20+ year treasuries and 40% IOUs backed by cash reinvested in its own MM, which in turn is more than half IOUs from TBTF banks backed by nothing.

sophie wrote: Congratulations foglifter!  That is some serious perseveration.

You can use VUSTX, VTSMX, and either vanguard prime or VFISX plus the brokerage window to make up your PP.  You might want to get the Vanguard Treasury MM included - it's closed to new investors now but one day (over the rainbow) it will reopen.

I also suggest including the target date funds.  Not everyone is comfortable managing investments, so it would be useful to include a full range of the one stop shopping funds.

Sophie, thanks for your suggestion! Initially I included LifeStrategy funds but replaced them with the target funds in the final line-up.


As to Treasury MM (VUSXX) we asked for it, but didn't get it because it's closed. I decided to include Vanguard Federal Money Market Fund (VMFXX) instead.

LC475 wrote:

foglifter wrote:Are there any other Vanguard or non-Vanguard funds worth consideration? Please share your thoughts.

Of course!  The funds that would be necessary to make a Permanent Portfolio!  So, top needs:

TLT
GLD / IAU / SGOL
SHV / SHY, though VFISX may serve the same purposes close enough.

You would also do well to select 3 or 4 other Total Stock Market funds from different companies, so people can do diversification, as well as at least one plain S&P 500 fund.  This also weights/emphasizes "the right choice" for stock funds -- if someone is picking at random, they're more likely to get something good.  Or, more likely, if they're looking through the list they'll see, "There sure are a lot of those; the bright boys in back must think they're important, I'd better get at least one."
Also a Dow Jones fund, and at least one other large-cap fund.  You have a zillion small cap funds, but no large-cap ones that I see (maybe I missed them).
A commodities fund would probably be a popular option.  Though 401ks rarely include a pure gold fund, they often include a commodities fund.  People like them.  Your plan should have both.
You could have a silver fund, too, for that matter.

Thanks for your thoughts. I included VFINX in addition to TSM. Also included TLT, GTU and IAU. This should make the PP construction feasible without using the brokerage window (which costs $100 per year).

Desert wrote:

rickb wrote:

LC475 wrote: Really?  I thought TLT was the best, the strictest about having just US Treasuries and nothing else.  No longer the case?

See http://gyroscopicinvesting.com/forum/bo ... d-harmful/

So even though the claim is TLT holds "only" 20+ year treasuries, it actually holds about 60% 20+ year treasuries and 40% IOUs backed by cash reinvested in its own MM, which in turn is more than half IOUs from TBTF banks backed by nothing.

TLT maturity is a bit longer than VUSTX, but 24.7 years is still plenty long.  With low interest rates, the duration is much longer than in HB's day.  And with TLT's issues that Rick described above, I'd rather hold VUSTX.

I included both TLT and VUSUX. I agree, VUSUX should be fine and being Admiral  it's cheaper than TLT. Plus there will be a fee of 4 cents per share for ETF purchases. But it's good to have choice.