Re: thoughts on these potential rollover investments?

<> wrote
snipped to keep this concise; please look back
> My question concerns where to roll over the old Morgan
Stanley 401K
> money. I suppose it wouldn't hurt to leave it where it is,
but I've
> become interested in investing in international stuff
(emerging
> markets) and the energy industry

Some thoughts:

If the flexibility (choice of funds, fees, etc.) of the old
401(k) accounts is not to your liking, definitely roll them
over to an IRA.

It sounds like you may be ruling out mutual funds. I
wouldn't. ISTM for retirement savings the argument for ETFs
is 'more diverse choices,' especially for foreign
stock-based funds. On the other hand, there are index mutual
funds of foreign stocks with comparable fees and no trading
commission costs, assuming certain things. You mentioned
minimizing trade in ETFs to keep fees low, so you might want
to adjust your sights, giving some consideration to mutual
funds. Index mutual funds can be cheaper than ETFs to trade.
E.g. if you have a Fidelity account, FSIIX is an
international blah blah stock index fund worth considering.
Not long ago it had the lowest expense ratio of any
international fund. (But that's just a teaser from Fidelity.
Investigate its minimums, etc.)

If you do go with ETFs for whatever reason, then why (per
your post) only Vanguard and Fidelity managed ETFs? For the
most part, who sells ETFs does not matter. By contrast,
buying a Vanguard mutual fund through a Fidelity account is
going to add extra fees. Just look for low expense ratios,
for starters, for an ETF in a category you like.
www.etfconnect.com has a decent screener.

Caveat: Compared to U.S. domestic stock ETFS, the pricing of
ETFs holding foreign stocks is less likely to reflect the
underlying shares' prices. Many sites on the internet
caution investors about this.

Do you have an allocation plan? E.g. do you know how much of
your portfolio you want to put into emerging markets?
International stock indices? For links to some free onine
tools for allocating that will give you some ideas on how to
approach this for your age and risk tolerance, see
.

Finance.yahoo states that DODFX (the Dodge and Cox
International fund you mentioned) has an expense ratio of
0.77%. From my reading, you can do better, as far as
expenses are concerned. (Note: Double check finance.yahoo's
numbers with other sources. finance.yahoo is not always up
to date.) Studies have made compelling investing arguments
for generally seeking low expense ratio funds, be they
mutual funds or ETFs.

Re: thoughts on these potential rollover investments?

"Elle" <> writes:

> Finance.yahoo states that DODFX (the Dodge and Cox
> International fund you mentioned) has an expense ratio of
> 0.77%. From my reading, you can do better, as far as
> expenses are concerned. (Note: Double check finance.yahoo's
> numbers with other sources. finance.yahoo is not always up
> to date.) Studies have made compelling investing arguments
> for generally seeking low expense ratio funds, be they
> mutual funds or ETFs.

International funds almost always have higher expense
ratios than their domestic counterparts.

Similarly, actively managed funds always have higher
expense ratios than passive index funds.

Finally, smallcaps typically have higher expenses
than largecaps.

DODFX is both international and actively managed. Given
those facts, 0.77% is a very *low* expense ratio. The
question is can the managers add enough value to overcome
that level of expense? Not all that many can, especially
if the expense ratio were closer to the average for
international actively managed largecap funds (1.49%
according to mstar).

Morningstar's analyst's 4 picks in the Largecap International
Value category have expense ratios from 0.77 (DODFX) to
1.23%. DODFX has a record which has been trouncing its
index, the MSCI EAFE, for a few years. It hasn't been
around all that long but it's got the #1 three year record.

(Note that the EAFE index itself had head-turning
performance in '03 and '04)

Note additionally - this fund is unhedged - if the dollar
tanks, your return in dollars will be very strong. If
the dollar gets stronger, it'll hurt.

Some international funds are hedged and some aren't.
Arguments may be made for either style, but an unhedged
one give one, effectively, another type of exposure which
may be considered an advantage if one is looking for
diversification.

FWIW.

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Re: thoughts on these potential rollover investments?

<> wrote
snip for conciseness; please look back
> International funds almost always have higher expense
> ratios than their domestic counterparts.

On my mind when I posted was that Vanguard and Fidelity's
international stock index mutual funds have expense ratios
that are much lower. E.g. VGSTX (0.31%) and FSIIX (0.10%)
(no loads too, of course).

I think the OP can do better than the Dodge and Cox fund, as
far as expenses are concerned.

Based on my reading of studies on the subject, I reject the
validity and usefulness of assessing mutual fund performance
based on only a few years of data.

Index funds have much to recommend them for a long-term
position. For a short-term position, it's a gambler's or
numerologist's game.

Re: thoughts on these potential rollover investments?

"Elle" <> writes:
> <> wrote

> I think the OP can do better than the Dodge and Cox fund, as
> far as expenses are concerned.

In an index fund or ETF, yes. Actively managed fund? Probably not.

As to whether or not indices are the way to go, that
is a whole different question. The OP seems more
interested in concentrating in certain sectors within
international.

One more thing about the Dodge and Cox fund - in order
to keep expense ratios low, it may not be available
in certain mutual fund supermarkets (brokerage accounts)
without a transaction fee.

Places like Fidelity typically charge the funds 25 or 35 bp
on an ongoing basis for no-transaction-fee funds purchased
through them. The consumer won't see that because it's
paid by the mutual fund, but it still comes out of the
expenses the fund pays. This isn't necessarily as nasty
as it sounds, because every fund share sold through a
brokerage is more assets in the fund and the brokerage
takes care of all the paperwork - large funds may have
low costs for managing such paperwork but smaller funds
often do not and a small fund paying a brokerage to
do all that may actually save the fund (and its investors)
some money.

Anyway, leaving aside the index versus active discussion,
yes, expenses matter. They matter a lot. And there may
be more to them than just the expense ratio (ie transaction
fees). So keep an eye out.

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Re: thoughts on these potential rollover investments?

Elle wrote:
>>International funds almost always have higher expense
>>ratios than their domestic counterparts.
>
> On my mind when I posted was that Vanguard and Fidelity's
> international stock index mutual funds have expense ratios
> that are much lower. E.g. VGSTX (0.31%) and FSIIX (0.10%)
> (no loads too, of course).

Those aren't quite comparable, assuming you meant Vanguard's Total-Int'l
fund (VGTSX). Both those funds are more growth weighted than D&C's and
some investors prefer to value-weight their international holdings.

The closer substitute would be Vanguard's International Value fund which
has expenses of 50 basis points. Still cheaper than D&C's fund but not
by all that much. Like D&C it's actively managed. Int'l Value is one of
the "weak spots" for Vanguard, if you're looking for passively managed
funds.

-Tad