From: jhc@m2lll.uucp (James H. Coombs)
Subject: Re: Fidelity Fund Options
Reply-To: jhc@iris.brown.edu.UUCP (James H. Coombs)
Organization: IRIS - Brown University
Date: Thu, 10 Sep 1992 04:22:48 GMT

In article <Dmerrill-090992130325@47.140.3.216> Dmerrill@bnr.ca (Dana Merrill) writes:
>In article <1992Sep9.152326.23926@infonode.ingr.com>,
>james@brock.b17b.ingr.com (James Brock) wrote:

>> Magellan %30
>> Growth Co. %30 (recently transferred entire balance to Balanced Fund, as
>> well as weekly allocations)
>> Overseas Fund %40

>> My plan allows investments in only the four above funds plus 
>> the GIC fund.

What a crock!  Why these limitations?!

If I were you, I would not put much in Overseas.  None of the Fidelity
internationals have good records for risk/reward.  I looked at them
myself and concluded that I was being offered high-risk/low-reward,
especially compared to the low-risk/high-reward of Templeton Foreign.
In any case, the largest portion that I have seen recommended for
international is 30%.

I would look closely at Magellan and Balanced.  I am not sure that
there is much point in holding both Growth and Magellan.  You should be
getting annual reports, so you can compare the prospectuses to see what
they are holding.  They are both Growth funds.  Etc.  Balanced at
least offers you something different.

>My first question is whether or not you have to pay Fidelity's loads under
>a plan such as this.

I had a 403b at Fidelity, and I think I did not pay the loads.  But I
changed jobs, and I was happy to transfer the money into an IRA and pay
loads so that I would have some freedom.  I put it into sector funds,
and I made back my 3% right away.  In the 403b, I wanted to switch from
Growth Co. to Contrafund but could not, and Growth went down while
Contrafund went up.

>Furthermore, it has always seemed that it would be of benefiet for EVERYONE
>if a company had its 401 plan with someone such as Fidelity (as long as
>Fidelity waived the loads!!!).

People emphasize loads too much.  You have to look at total expenses.
Fidelity's funds are not expensive over a 3-5 year period.

>Employees whould have a very wide choice
>of options for directing their 401s, Fidelity (or whoever) whould get

Sounds good, but then they you have the nonsense of being restricted to
four funds, etc.  And notice that the employer offers two growth funds
and no bond funds.  I suspect that the incompetence is at the employer's
end, but then it is up to Fidelity to help people make decent
decisions.

>Anyone care to comment?  Is this done at other companies?  The plans 
>that I have been familar with generally offer the misleading 
>"Guaranteed" investment contract or GIC, the companies stock or some
>index fund.

Well, Vanguard Index would be a welcome offering.  From the few plans
that I have seen, however, the people setting them up know little more
than how to set up the accounts and get the money moved from one place
to another.  You have to consider the retirement planning as part of
the total compensation package, and these bogus plans have to be offset
by something very worthwhile---such as enough additional salary so that
you can plan for your retirement properly.

--Jim
Newsgroups: misc.invest