Prudential 401(k) Options

**krantcents** · 12-18-2010, 02:52 PM

Originally posted by darga19 View Post

Hello all! I'm new to the forum hoping to learn...so thanks in advance for all the tips and advice...

Background: I'm turning 26 in January. I currently have $7200 in my 401k thru Prudential, and am planning on (slightly) raising my yearly contributions to $6600 starting 2011. I'm currently using the Goalmaker option, setup at 'Aggressive, 16+ Years to Retirement'. My asset allocation currently looks like this:

1. Large Cap Value/LSV Asset Management Fund (28%)
2. Large Cap Growth/Neuberger Berman (28%)
3. Small Cap Value/Kennedy Capital Fund (12%)
4. Small Cap Growth/Boston Co. Fund (12%)
5. International Blend/Artio Fund (20%)

What do you guys think of these?

I'm considering utilizing an index fund in lieu of all or part of #s 1 and 2 above because of the lower expense ratio, and I also read that managed funds rarely beat index funds over the long haul. The Dryden S&P500 Index is the only index available to me (my choices are pretty limited). Thoughts?

Also, I'm planning to start a Roth IRA in February with $3k ($100/m min contribution thereafter), and considering the Vanguard Target 2045 fund. Thoughts on this?

First, why Prudential? I would want a asset allocation that is appropriate for one who has approximately 40 more working years. I think I would be slightly aggressive. I think I would select growth over value and approx. 10-20% International because of your age. No matter what, monitor your choices whether quarterly or annually. Good luck

**jpg7n16** · 12-18-2010, 04:28 PM

Looks fine. It is aggressive like you want it, and you've got the time horizon to take that risk. Nothing crazy shown, so looks good.

Switching to an index would really just be a personal choice. Some people are all about index funds, others like me don't care much either way as long as the overall assets are appropriate.

Are you planning to retire at 60? Might wanna choose the 2050 fund for standard 65 retirement age. Though I doubt there'll be much difference in the performance of the two over that time.

**darga19** · 12-20-2010, 05:08 AM

Why Prudential: That's what my employer chose...we don't have a choice here unfortunately.

Retirement Age: Yes I would LOVE to retire at 60! I'm hoping to make it happen but who knows. Either the 2050 or 2045 fund is what I'd go with...I typed in 2045 but I'll probably just go with the 2050 fund.

Should performance be a concern with these funds? I'm not sure what to look for when choosing to be honest...

**Slug** · 12-20-2010, 10:26 AM

Yeah, I have Prudential too. Several of those funds are pretty high fee if I remember correctly, compared to the Dryden. I think my current allocation is 50% Dryden, then 30% Pimco Total Bond, and 20% into the money market. All of those have super low expense ratios. I save the more targeted, international, and aggressive allocations for my Roth and rollover accounts. If I were you, I'd definitely be replacing some of that with the Dryden.

**darga19** · 12-20-2010, 11:39 AM

Thanks for the reply Slug...good info. I was thinking the same thing...what's the point of having 2 equal chunks of LC stock (1/2 value and 1/2 growth) when I could just combine them into one balanced, and much lower cost expense ratio index fund??

There doesn't seem to be an advantage in not doing that.

**Hector** · 12-20-2010, 03:23 PM

I would agree on your choice of investing into index fund in lie of all of #1 and #2. I dont know much about target fund, but if you have stomach of high risk and you consider yourself aggressive, I would suggest following allocation (based on choices presented in your post):
Fixed income (5%)
Dryden S&P 500 Index (30%)
Small Cap Value/Kennedy Capital Fund (20%)
Small Cap Growth/Boston Co. Fund (25%)
International Blend/Artio Fund (20%)

**darga19** · 12-21-2010, 07:19 AM

Thanks for the reply. Here is the complete list of choices I have available to me, along with expense ratios:

Guaranteed Income Fund (0.15%)
Core Bond Enhanced Index/PIM Fund (0.22%)
Retirement Goal 2040 Fund Fund (1.06%)
Retirement Goal 2050 Fund Fund (1.09%)
Retirement Goal Income Fund (0.81%)
SA/Oakmark Equity & Income Strategy Fund (0.80%)
Large Cap Value/LSV Asset Management Fund (0.67%)
Dryden S&P 500 Index Fund Fund Summary (0.17%)
Large Cap Growth /Neuberger Berman Fund (0.65%)
Mid Cap Value (sub-advised by Wellington Management) Fund (0.67%)
Mid Cap Growth/Artisan Partners Fund (0.66%)
Small Cap Value/Kennedy Capital Fund (0.90%)
Small Cap Growth/ The Boston Co. Fund (0.90%)
International Blend / Artio Fund Fund (1.06%)
American Century Real Estate Fund (Investor Shares) Fund (1.16%)

**darga19** · 12-21-2010, 07:22 AM

Here is what I'm considering now, with the only possible change being allocating maybe 10-15% in bonds:

50% Dryden S&P 500 Index Fund Fund Summary (0.17%)
20% International Blend / Artio Fund Fund (1.06%)
15% Mid Cap Growth/Artisan Partners Fund (0.66%)
15% Small Cap Value/Kennedy Capital Fund (0.90%)

The Artisan and Kennedy funds have done well, and have good Morningstar ratings, although the expense ratios are rather high. The International Fund has done only OK...but I want some international in there somewhere don't I? (and that's my only option).

The other option is to stick with primarily the Dryden Index and Bonds/GI in my 401(k) and then go for emerging markets/international/small cap index funds in my Roth. Thoughts?

**Slug** · 12-21-2010, 08:01 AM

Originally posted by darga19 View Post

The other option is to stick with primarily the Dryden Index and Bonds/GI in my 401(k) and then go for emerging markets/international/small cap index funds in my Roth. Thoughts?

I tend to align with this second option. I would add in the PIMCO bond fund in your 401k and then do all Dryden. You can then easily use low fee ETF's in your Roth to capture international and any other sector focus you like.

Prudential 401(k) Options