Move money to no-load index funds or leave it where it is?

[zetta]

I have about $280k in a taxable investment account, and $250k in IRA/ROTH accounts, all in American Funds mutual funds.

Because my dad was a stock broker, I got a special discount available only to family members, where all these funds were purchased at net-asset-value (NAV). So I didn't pay any loads on them. My understanding is that among load funds, American has some of the best expense ratios.

Moving forward, should I sell these funds and move the money into no-load index funds? I would have to pay taxes on any capital gains...

With new money that I invest, should I continue to contribute to the NAV American Funds accounts, or purchase no-load index funds?

[disneysteve]

I don't think you should move money in taxable accounts unless the investments are underperforming their peers. Moving the IRA money would be simpler since there are no tax consequences but I still wouldn't move that money if you are satisfied with the performance and expense ratios.

Going forward, I'd say the same thing. If you can continue to purchase these funds with no load, the funds are performing well relative to their peers and the expense ratios are comparable, I'd see nothing wrong with staying where you are.

[creditcardfree]

I second Steve's advice!

[cptacek]

Do you still get this no-load investment opportunity? (You said "I got a special...", making me ask).

[Broken Arrow]

I'm OK with the consensus of just leaving it alone for now.

That said, what class funds do you own? For example, American's balanced fund (BALCX) has an expense ratio of 0.67% Class A and 1.45% for Class C. I'm guessing it's Class A....

Contrast that with Vanguard's Balanced Index (VBINX), where the expense ratio is normally 0.25%, but if you qualify for Admiral share (which you can if your account there is at least $100k), then the ER drops even more to 0.15%

I don't know how you feel about comparing it to an index fund, but for a difference of as much as 0.5%, that can translate to roughly $1400 a year in savings for a $280k balance.

So, whether you decide to move the money or not, if I was in your position, I would at least not buy any more American funds....

[Snodog]

So, whether you decide to move the money or not, if I was in your position, I would at least not buy any more American funds....

I agree. Love those low ER's of index funds.