Mutual Fund Options

[Scarfinger]

I signed up for the MWF so that I could see what funds were available. I i got access to a PDF file and which has a million Actively Managed funds listed. The only funds I would be interested in are the Dimensional Funds because I have read they are rules based funds....but. It would come at a cost. The cost is higher fees.

Actively managed funds cost more and perform worse than their passive managed benchmarks. This is proven by SPIVA and institutional based research. The longer time period you look at the worse actively managed funds perform.

The Persistence Scorecard shows that regardless of asset class or style focus, active management outperformance is typically short-lived, with few funds consistently outranking their peers or benchmarks.

Recent years illustrate this point quite well. Exhibit 1 shows that the top-quartile funds of 2019 often continued to lead the way in 2020. Had these funds developed a consistent winning strategy? Sadly, no. Even with the bull market extending into 2021, these funds quickly reverted to the mean, and only 2.2% of the 2019 domestic equity winners remained in the top quartile by 2021.

My guess is a bunch of Funds lobbied to get put in the list because they want to be a part of the money grab... grabbing our money. Proceed at your own risk.

[Scarfinger]

So now I am more confused. I was able to get into the MFW site and you can actually search by cheapest funds and some of them I am actually invested in in my Fidelity IRA. The confusing part is I can't tell/don't know what fees they are charging. I get a blank page when I click on the fund. The site doesn't seem fully functional. If you can't/don't understand the fee structure? hmmm. Still trying to figure it out.

[Scarfinger]

So now I am more confused. I was able to get into the MFW site and you can actually search by cheapest funds and some of them I am actually invested in in my Fidelity IRA. The confusing part is I can't tell/don't know what fees they are charging. I get a blank page when I click on the fund. The site doesn't seem fully functional. If you can't/don't understand the fee structure? hmmm. Still trying to figure it out.

If you go to top right "tool" you can search by Fund Fees. and the first page has fund fees of .02 to .04% which is pretty good. I am not sure how you would find out the "TOTAL" fees based on the Fund fees + the administrative fees from this new management company.

[Scarfinger]

So now I am more confused. I was able to get into the MFW site and you can actually search by cheapest funds and some of them I am actually invested in in my Fidelity IRA. The confusing part is I can't tell/don't know what fees they are charging. I get a blank page when I click on the fund. The site doesn't seem fully functional. If you can't/don't understand the fee structure? hmmm. Still trying to figure it out.

If you go to top right "tool" you can search by Fund Fees. and the first page has fund fees of .02 to .04% which is pretty good. I am not sure how you would find out the "TOTAL" fees based on the Fund fees + the administrative fees from this new management company.

So basically it looks like 150$ initial transfer fee + 150$ annual fee + Fund fee. So maybe these funds are...ok. It looks like they have some cheaper passively managed fund choices with low fees. $150 dollar annual fee may be acceptable?

[Scarfinger]

From Fedweek:

The $40,000 figure results from two restrictions on using the window: no outside investment can bring the total above 25 percent of the person’s total account balance, and the initial transfer in must be at least $10,000. Those requirements may give some investors pause, as may annual fees totaling $150 plus a $28.75 per-trade fee and the additional fees charged by the outside funds.

To me you would need to invest at least $62,500 meaning you would have a TSP account of $250,000 so you annual fee would be .25% plus the fund fees. This would be a 400% cost increase over the standard TSP cost of around 0.05%. The .25% cost is similar to some online management companies like "Betterment". This still doesn't account for the $28.75 dollar charge each time you move money around from what I understand.

If you had 500,000 TSP account you could put $125,000 and reduce the fee cost to 0.12% which would be low enough for me to invest in the MFW.

Imagine the FERS employee with $40,000 in his TSP that qualifies to put the minimum of $10,000 (24% of his TSP balance) into the MFW. They will be paying (150$ administrative fee) 1.5% + fund fees which is a 2899%+ increase in fees over the TSP money. At least he would only be getting raped on a max of 25% of his account.

If you are doing a Monthly or Daily strategy, the "$28.75 per-trade fee" will eat you alive. Looks only viable for the naïve, and or the buy and hold investors.

[wingchaser]

From Fedweek:

If you are doing a Monthly or Daily strategy, the "$28.75 per-trade fee" will eat you alive. Looks only viable for the naïve, and or the buy and hold investors.

Scared-One: We’re still restricted to 2 IFT(s) per month, so Buy & Hold (w quick exit strategies) remain our only viable options…

Best of Luck (everyone) in all you choose to endeavor!!!

[Scarfinger]

From Fedweek:

If you are doing a Monthly or Daily strategy, the "$28.75 per-trade fee" will eat you alive. Looks only viable for the naïve, and or the buy and hold investors.

Scared-One: We’re still restricted to 2 IFT(s) per month, so Buy & Hold (w quick exit strategies) remain our only viable options…

Best of Luck (everyone) in all you choose to endeavor!!!

Ok. I was thinking it was unlimited with a charge each time. The daily strat with 24 moves per year would rack up $600+ in transfer fees. Ouch! Buy and hold with minimal IFT’s is the only viable option. The more you can invest will lower the static fee structure cost basis. I feel like a minimum Tsp balance of $500,000 for $125,000 transfer into the MFW account and minimal transfers may make it a viable option. I have about 10 more years until I reach those numbers. I will not be investing in the MFW