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Thread: TSP No Longer Low Expense Leader

  1. #1

    Default TSP No Longer Low Expense Leader

    https://www.fedsmith.com/2018/08/28/...xpense-leader/

    Effective August 3, Fidelity created two funds with $0 expense fees along with cutting fees on many of its funds.


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  3. #2

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    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by McDuck View Post
    https://www.fedsmith.com/2018/08/28/...xpense-leader/

    Effective August 3, Fidelity created two funds with $0 expense fees along with cutting fees on many of its funds.
    Good article!

    Most new retirees move their TSP out, and into other investment vehicles. In the past, this was mostly due to the restrictive withdrawal rules of TSP. But by Sept of 2019, the new TSP regs are scheduled to be out. With withdrawal options no longer restrictive at TSP, the lower fees become the more enticing factor. This article shows that this may no longer be the case. At the very least, fees should be more competitive.

    I am glad the article also mentioned Vanguard. I have both Traditional and Roth IRAs with Vanguard, and have noticed the free commisions and lowering fees there also. The vastly greater options outside of TSP are still alluring. So it will still be a decision new retirees will have to make.

    What's at stake, is the multi-Trillion dollar size of TSP. For me....I will be retiring this Dec, and still have to decide. I am leaning to splitting it 50/50 between TSP and Vanguard. Hedging my bets, as it were!
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

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  5. #3

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    Default Re: TSP No Longer Low Expense Leader

    STOP STOP STOP

    This article is not correct. There WILL be fees in those funds in the future

    The article says there are NO FEES and NO EXPENSES. That is not correct. The writer of that article is NOT a financial professional- he's a Public Affairs writer only.

    The funds cited are BRAND NEW FUNDS- having commenced operation THIS MONTH, and the initial Prospectus is available for you to read here:

    https://fundresearch.fidelity.com/mu...mary/31635T609

    IN the prospectus, it says that there are no sales commissions (true), but it also says that there WILL BE COSTS in the future.

    "
    Portfolio TurnoverThe fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual operating expenses or in the example, affect the fund's performance.

    The prospectus only shows ZERO for all fees at this time because it's only been operating a few days, and hasn't had any quarters or years to report fees on.


    That WILL change, as soon as the fund finishes it's first quarter, and is able to publish it's cost data.


    Now, that said, I LIKE the funds they set up, and will be following them. I especially like that the international fund is more diverse than the TSP's I fund.

    I just want to make sure everybody understands that it is VERY LIKELY that the TSP will continue to be much lower costs for some time to come. The fees on these non-TSP indiex funds WILL show up shortly We shall see soon.




    Clip:

    Fidelity ZEROSM International Index Fund (FZILX)

    No Transaction Fee (1*)





    (1*)-1. No Transaction Fee Fidelity funds are available without paying a trading fee to Fidelity or a sales load to the fund. However, the fund may charge a short-term trading or redemption fee to protect theinterests of long-term shareholders of the fund. Shares are subject to the fund's management and operating expenses. See Expenses & Fees for more information.

    Fund fact sheet here:
    https://fundresearch.fidelity.com/mu...appcode=RETAIL




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  7. #4

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    Default Re: TSP No Longer Low Expense Leader

    Bum Dope?



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  9. #5

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    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by nnuut View Post
    Bum Dope?
    Yes. The writer isn’t a financial advisor, he’s simply a reporter, and he got the facts wrong.




    Sent from my iPhone using TSP Talk Forums

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  11. #6

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    Default Re: TSP No Longer Low Expense Leader

    As I approach retirement, other financial people approach me with "great deals" When asked about fees for TSP I can only answer what is available on the TSP.gov site. This is 2017 information from

    https://www.tsp.gov/PDF/formspubs/high18c.pdf


    C gross fees .046%, other .002%
    G gross fees .046%, other 0%

    These are the two funds I am dealing with right now. When I state these figures financial managers call BS and say I am paying more. Any comments from those having both TSP and outside accounts?

    FWIW when I retire at the end of the year I plan to move it all to G fund. ~2.5% will keep me in funds until I die. Unless the .gov takes away the FERS annuity and SS. Then we are all screwed.

    PO

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    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by PessOptimist View Post
    As I approach retirement, other financial people approach me with "great deals" When asked about fees for TSP I can only answer what is available on the TSP.gov site.

    C gross fees .046%, other .002%
    G gross fees .046%, other 0%

    These are the two funds I am dealing with right now. When I state these figures financial managers call BS and say I am paying more. Any comments from those having both TSP and outside accounts?

    PO
    I am NOT promoting Vanguard, but I have been happy with my IRAs with them.

    Here is the link to their Mutual Fund and ETF expense ratios and returns, as you asked.
    https://investor.vanguard.com/etf/li...th-end-returns

    Note that this link does not require you to have an account with Vanguard in order to access this information.
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

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  15. #8

    Default Re: TSP No Longer Low Expense Leader

    Thank you James!
    Quote Originally Posted by James48843 View Post
    Yes. The writer isn’t a financial advisor, he’s simply a reporter, and he got the facts wrong.





    Sent from my iPhone using TSP Talk Forums

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  17. #9

    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by PessOptimist View Post
    When I state these figures financial managers call BS and say I am paying more. Any comments from those having both TSP and outside accounts?
    Well, as a taxpayer you do but then we all do. As I understand it, the government pays Blackrock to manage our Funds (except the G Fund). It also has the expense of the government agency (FRTIB) that maintains these contracts and deals with us. What you are interested in is the cost to your funds under management and that is what is reported on the TSP web site.

    The government pays part of our cost and it is hard for financial managers to compete with that. On your accounts outside of a government or company 401K plan you pay all of it. That's part of the benefits we get for being in a 401K plan and why private employers often require you to transfer your money out when you leave.

    You have to watch it when someone calls BS because it is often a sales pitch that has nothing to do with what you are talking about. The one I here all the time is that it costs you more because you don't make the fabulous returns that you could by investing with them. Well, the people I know who have pulled their money out of TSP to invest it outside with a money manager say the returns may be greater before expenses but in the end they aren't making any more money than their TSP L Funds. It's what you are left with that counts.
    Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
    Past Returns:
    2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%


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  19. #10

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    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by PessOptimist View Post
    As I approach retirement, other financial people approach me with "great deals" When asked about fees for TSP I can only answer what is available on the TSP.gov site. This is 2017 information from

    https://www.tsp.gov/PDF/formspubs/high18c.pdf


    C gross fees .046%, other .002%
    G gross fees .046%, other 0%

    These are the two funds I am dealing with right now. When I state these figures financial managers call BS and say I am paying more. Any comments from those having both TSP and outside accounts?

    FWIW when I retire at the end of the year I plan to move it all to G fund. ~2.5% will keep me in funds until I die. Unless the .gov takes away the FERS annuity and SS. Then we are all screwed.

    PO

    Those "Expense" and "Fee" figures ARE CORRECT.

    There are several reasons WHY the expenses in TSP are so low.

    First, is that TSP gets a small amount of money in "Asset forfeitures ", in that WHEN A NEW EMPLOYEE LEAVES in the first six months of employment, the employee's contributions are returned to them, but the AGENCY MATCHING FUNDS go into the TSP's administrative overhead accounts available to use for other expenses . Also, the TSP now charges a FEE FOR A LOAN, which they didn't originally do. Now they do, and the loan fees help with the expense.

    The third source of income is the SLUSH FUND of the company which actually performs the trades. The process is- when YOU place an order before noon, everyone's trades are entered in a computer. By 12:10, the transfer agent ( Is this still Blackrock?) knows exactly HOW MUCH of each fund they will have to buy or sell before the markets closed at 4 p.m.

    Most of the time, they get VERY CLOSE to the exact closing figure. But they also MAY end up selling or buying shares a half-hour before the market close, and THEY ARE SO GOOD AT THAT JOB, of TIMING, that they sometimes can make a few extra dollars on the trade.

    At the end of the day, IF the team trading did BETTER than the actual numbers would require at the close, then there is a few bucks left over, and they are able to keep the expenses low.

    So yes, TSP expenses are far lower than nearly ANY other investment option out there.

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  21. #11

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    Default Re: TSP No Longer Low Expense Leader

    Quote Originally Posted by Cactus View Post
    Well, as a taxpayer you do but then we all do. As I understand it, the government pays Blackrock to manage our Funds (except the G Fund). It also has the expense of the government agency (FRTIB) that maintains these contracts and deals with us. What you are interested in is the cost to your funds under management and that is what is reported on the TSP web site.

    The government pays part of our cost and it is hard for financial managers to compete with that. On your accounts outside of a government or company 401K plan you pay all of it. That's part of the benefits we get for being in a 401K plan and why private employers often require you to transfer your money out when you leave.

    You have to watch it when someone calls BS because it is often a sales pitch that has nothing to do with what you are talking about. The one I here all the time is that it costs you more because you don't make the fabulous returns that you could by investing with them. Well, the people I know who have pulled their money out of TSP to invest it outside with a money manager say the returns may be greater before expenses but in the end they aren't making any more money than their TSP L Funds. It's what you are left with that counts.
    Hmmm ... are you sure about government covering some of the costs of TSP? My understanding has always been that it is supported by the fees charged against individual accounts and that the reason the fees were so low is the absence of a profit-motive beyond the contract with Blackrock.

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  23. #12

    Default Re: TSP No Longer Low Expense Leader

    I can be wrong about that. I do remember several years ago the government having to cough up some more money to Blackrock because something like $91 million was not enough for some reason. My understanding was that this had to do with administering our accounts. I could have misunderstood that. I find it pretty much a black box how all this really works.
    Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
    Past Returns:
    2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%

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