403b question/fund options

[ifonlyIknew]

In my 403b, I've noticed that I now have the option of investing in Vanguard funds, so I would appreciate some input.

Currently my large cap fund(45% of portfolio) is performing slightly less than the S&P. The current cost is 39.00/share. It is a B-class fund, so there are redemptions fees. the expense ratio is .45%.

I would like to switch this 45% to Vanguard's Growth and income fund. The stats are the same, except the expense ratio is lower at .32%, is 29.00/share, and it is a no load fund. Also the major companies in both funds are almost the same.

Question: Does it make sense to allocate future investments to the Vanguard fund? Does this mean that i would still be paying the .45% annually on the existing fund AND the .32% on the Vanguard fund?

Essentially, I do not want to pay account maintenenace fees on the small amount of money I have in the current large-cap fund, when the bulk of my future investment will be in the Vanguard Growth and income fund.

What are my options here? Or is it not worth it to make any changes at this time?

Also, I used the large cap as one example, but the same scenario applies to my international equities fund as well..higher expense ratio, end-loaded fund, vs. Vanguard's no load, lower expense funds.

Thanks

[disneysteve]

I think it partly depends on where you are in your investing life. If you are just starting out, take the redemption hit and move the money. You'll save more than enough over 20-30 years to make it worthwhile. On the other hand, if you already have a substantial amount in the current funds, it might make sense to keep existing money in there and just direct new money into the lower cost funds.

Question: Does it make sense to allocate future investments to the Vanguard fund? Does this mean that i would still be paying the .45% annually on the existing fund AND the .32% on the Vanguard fund?

Yes, the money in the current fund would have the .45% ER and the money in the Vanguard fund would have the .32% ER.

[ifonlyIknew]

Thanks for the feedback. I do still have over 25 years to invest.

I've only held this 403b for 1 year, but I've lost about 6% so far, but i'm trying to look at the big picture here..although it's difficult at times.

Also the reason I'm even considering this is that I think I will not be eligible to contribute to my roth IRA due to AGI limits, so I'm going to try to contribute in my 403b beyond the match rather than go to a taxable account.

[jIM_Ohio]

B funds can convert to A funds if you hold them long enough in some cases. You need to understand what you hold and the rules as they apply to you.

I would not make a fund transfer based on expense ratio or current performance.