American Funds

[para38s]

I was reading a thread about leaving American Funds because of their high fees. I currently have a 401k account with them, that is sponsored by my employer. Is there anything I can do, I can't seem to figure out how much the fees are. I am doing okay right now, at least I think I am(3% return for the year).

[DRILLINDK]

American Funds are a good actively managed mutual fund. I have the majority of my 401k with them. I believd their fees are around 4%. However, if you're looking to reduce the fees, check out Vanguard. They have the lowest fees and have some very similar funds available.

[disneysteve]

I was reading a thread about leaving American Funds because of their high fees. I currently have a 401k account with them, that is sponsored by my employer. Is there anything I can do

If that is the only choice you have, there is nothing you can do except to complain to your employer and ask him to consider switching to a better 401k provider.

[kv968]

I was reading a thread about leaving American Funds because of their high fees. I currently have a 401k account with them, that is sponsored by my employer. Is there anything I can do, I can't seem to figure out how much the fees are. I am doing okay right now, at least I think I am(3% return for the year).

Your fees might not actually be THAT high. American Funds has a ton of classes of their shares and you just have to see which class your company has. Usually, companies can get you in an "R" class share group that may have an expense ratio that's comparable to a "normal" actively managed fund that's similar.

For example, I have (and invest in) the American Funds Europacific Fund at work. If I were to get the "A" shares on my own it would have a 0.84% expense ratio (not too bad) but pay a 5.75% load (REAL bad). "C" shares have no load but are almost double the expense ration at 1.62% (which is pretty bad). However my employer offers the R-5 shares which are no load and have an expense ratio of 0.55% (pretty good). If you do have "R" shares you have to check which number they are since even with them the cost could be from 1.61%-0.50%. Fun, huh? That's why I call their funds the "alphabet soup" of investing.

So just check what class they are and see the corresponding expense ratio. Basically if it's an "A", "B" (although I think they did away with that class) or "C" share you're more than likely paying either a load or a high expense ratio.

[Petunia 100]

I agree with the above. Typically, loads are waived in 401k plans. But certainly examine the choices in your plan and see if there are better funds available. There might be, or there might not.

I left American Funds recently and shared that here, but I do not have a 401k. My employer plan is a Simple IRA. So if it is set up with a commissioned broker (and it was), then the employee pays those commissions. When I was given the opportunity to split from the group and set up my account with any custodian I liked, I was happy to leave those commissions behind.

[para38s]

Your fees might not actually be THAT high. American Funds has a ton of classes of their shares and you just have to see which class your company has. Usually, companies can get you in an "R" class share group that may have an expense ratio that's comparable to a "normal" actively managed fund that's similar.

For example, I have (and invest in) the American Funds Europacific Fund at work. If I were to get the "A" shares on my own it would have a 0.84% expense ratio (not too bad) but pay a 5.75% load (REAL bad). "C" shares have no load but are almost double the expense ration at 1.62% (which is pretty bad). However my employer offers the R-5 shares which are no load and have an expense ratio of 0.55% (pretty good). If you do have "R" shares you have to check which number they are since even with them the cost could be from 1.61%-0.50%. Fun, huh? That's why I call their funds the "alphabet soup" of investing.

So just check what class they are and see the corresponding expense ratio. Basically if it's an "A", "B" (although I think they did away with that class) or "C" share you're more than likely paying either a load or a high expense ratio.

Okay, mine say R2. So it says American BalancedR2. I have 6 different mutual funds.
American balance
Capital income builder
Growth fund
Capital world G/I
Retirement 2010
Bond fund

[bjl584]

RLBBX American Funds American Balanced R2, mutual funds, quote, price - Morningstar

Here is the data on your balanced fund R2 class.

[kv968]

Like I said, unfortunately just because they're "R" funds doesn't mean they're always cheaper.

Here are your funds with their expense ratios:

American balance--------1.38%
Capital income builder--1.42
Growth fund-------------1.39
Capital world G/I-------1.56
Retirement 2010---------1.49
Bond fund---------------1.39

All of which are about double what you would pay using a "normal" actively managed fund.

Are there other choices in your 401k besides American Funds?
Are you getting an employer match?
Are you contributing to an IRA?

[para38s]

Like I said, unfortunately just because they're "R" funds doesn't mean they're always cheaper.

Here are your funds with their expense ratios:

American balance--------1.38%
Capital income builder--1.42
Growth fund-------------1.39
Capital world G/I-------1.56
Retirement 2010---------1.49
Bond fund---------------1.39

All of which are about double what you would pay using a "normal" actively managed fund.

Are there other choices in your 401k besides American Funds?
Are you getting an employer match?
Are you contributing to an IRA?

I do not contribute to IRA, because I am still trying to get out of debt. My employer gives me a 100% match up to 6%. So, I contribute the max, not a penny more.

[kv968]

I do not contribute to IRA, because I am still trying to get out of debt. My employer gives me a 100% match up to 6%. So, I contribute the max, not a penny more.

That's ok. At least you're getting the match and no more. I was just going to suggest that if you were contributing over the max to take that and instead open an IRA.

[Gina23]

I left American Funds with a managed broker for comprable self-managed Vanguard index funds... the fee amounts I am saving is ridiculous.