While I have been meddling with my 401(k) by buying and selling on huge drops and gains, I haven’t actually reviewed my 401(k) for a few years!  That is probably way too long, but considering how often I am investing, trading, and generally moving money this is probably a good thing for me.  I am going to start from scratch on this project, and as such, first I will review my choices, then rebalance what I currently have invested and then reallocate my future contributions.  The past growth, and/or decisions I made (which I don’t think are wrong) are irrelevant.

Reviewing my 401(k) Fund Choices

I have a horrible 401(k); it is filled with over priced fund options, but they are what I have to work with.

InvestmentTickerExpense RatioCategory
American Funds Euro Pacific Growth FundRERCX1.14%Foreign Large Growth
American Funds Growth Fund of AmericaRGACX0.98%Large Growth
Eaton Vance Floating Rate FundEVBLX1.03%Bank Loan
Invesco Real Estate FundIARRX1.50%Real Estate
N. Berman Mid Cap Intrinsic Value FundNBREX1.26%Mid-Cap Value
N. Berman Large Cap Value FundNBPBX1.22%Large Value
OH Active AllocationOAAAX1.18%Blended Equity (70 to 85% Equity)
OH Conservative Investor FundOACIX0.97%Blended Equity (30 to 50% Equity)
OH Equity Investor FundOAAIX1.16%World Stock
OH Global Opportunities FundOPGIX1.19%World Stock
OH Global Strategic Income FundOPSIX1.04%Multisector Bond
OH Cash ReservesCRSXX0.65%Prime Money Market
OH International Bond FundOIBAX1.04%World Bond
OH Mid Cap Value FundQVSCX1.18%Mid-Cap Value
OH Moderate Investors FundOAMIX1.01%Blended Equity (50% to 70%)
OH Value FundCGRWX0.96%Large Value


Ouch! An average expense ratio of 1.09%! How could it possibly cost me .65% to keep money in cash!? According to Forbes, this is double the national average in 2014,

401(k) participants paid an average expense ratio of 0.54% of assets for equity mutual funds in 2014, continuing a long-term downward slide, down 30% from 0.77% in 2000, according to a new Investment Company Institute report. The downward trend is good news for retirement investors because investment fees can erode your retirement nest egg. Still 12% of 401(k) mutual fund assets are invested in high-cost funds, with fees of 1% or more, ICI found. That means there’s plenty of room for employer and investor education surrounding fees.

Okay, enough complaining, it is what it is and I get a generous match from my bosses, so for free money how do I not eat the expense ratio? In fact, it looks like of my entire 401(k) an amazing 46% is from the match!  So, with my anger left in this section let’s build a Portfolio.

Rebalancing my Current 401(k) Assets

Since, I am approaching this without regard to what I have done in the past lets build out the asset classes and then I’ll choose the funds.  While I generally have a low risk tolerance, I am able to emotionally divest myself of this account.  It is actually the only account I don’t check daily.  If the market took a 50% haircut tomorrow I know I’d be excited so I could dollar cost average into cheap funds for 60 year old Evan.

Asset Class

First I have to decide how much of each asset class I am interested in.  As defined by Investopedia, an asset class is a

group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. The three main asset classes are equities, or stocks; fixed income, or bonds; and cash equivalents, or money market instruments. Some investment professionals add real estate and commodities, and possibly other types of investments, to the asset class mix.

Considering that I am comfortable taking risk in this account since you shouldn’t touch your retirement accounts I am going to with:

  • 85% Equity Funds
  • 10% Fixed Income
  • 5% Cash

Equity Portion of my 401(k)

Looking at the equity funds as a whole I am going to break it down:

  • 40% Large Cap
  • 40% Mid/Small Cap
  • 20% International Exposure

Fixed Income Portion of my 401(k)

  • 50% International Debt
  • 50% Domestic Debt

Cash Portion of my 401(k)

The only reason I keep any cash is because I want to be able to throw cash at the market if there is a significant dip.

Allocating Future 401(k) Contributions

Looking at my fund choices and my goal for allocation/balancing I am going to reallocate (and apply future contributions) as followed:

  • American Funds Large Cap Growth (RGACX) – 17% (half of my large cap allotment 40% of 85%)
  • Oppenhiemer Value Fund (CGRWX) – 17% (half of my large cap allotment 40% of 85%)
  • Oppenheimer Mid Cap Value (QVSCX) – 17% (half of my mid cap allotment of 40% of 85%)
  • N. Berman Intrinsic Value Mid Cap (NBREX) – 17% (half of my mid cap allotment of 40% of 85%)
  • Oppenheimer Global Opportunities Fund (OPGIX) – 17% (20% of 85%)
  • Oppenheimer International Bond Fund (OIBAX) – 5%
  • Oppenheimer Global Strategic Income Fund (OPSIX) – 5%
  • Oppenheimer Cash Reserves (CRSXX) – 5%

Besides the obvious of high expenses any thoughts on how I broke this all down?