Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:If Vanguard's Mutual Funds Aren't Cheap Enough For 401ks ... Not Rated 5.0 Email Routing List Email & Route  Print Print
Friday, January 08, 2016

If Vanguard's Mutual Funds Aren't Cheap Enough For 401ks ...

News summary by MFWire's editors

If Vanguard's [profile] mutual funds aren't cheap enough for your 401(k) plan, whose mutual funds are?

Jerry Schlichter
Schlichter Bogard & Denton
Senior Partner
That shocking question stems from a new class-action lawsuit over a huge 401(k) plan. As reported by our sister publication, 401kWire, last week Schlichter, Bogard & Denton filed a complaint against health insurer Anthem over the $5.1-billion Anthem 401(k) plan. This time Jerry Schlichter, the class-action attorney now infamous for his 401(k) fee lawsuits against giant employers, is going after a Vanguard-run 401(k) plan that's largely filled with Vanguard mutual funds.

Some of the funds in question are indexed. Some of them were first offered in the plan in retail, not institutional, share classes. And Vanguard also offers separate accounts or collective trusts that follow the same strategies but for lower cost. If this big 401(k) plan sponsor isn't safe from 401(k) fee criticism even when it uses low-cost, Vanguard index mutual funds, which plan sponsor is safe using any kind of mutual fund? And if a shift happened in the largest plans, it could eventually trickle down to smaller plans for smaller employers.

Morningstar columnist John Rekenthaler digs into this new suit, Bell v. Anthem. BenefitsPro, Bloomberg, InvestmentNews, and PlanSponsor also covered the news.

At least part of the issue here revolves around accusations of lack of monitoring of fees, not just what level the fees were. And while collective trusts and separate accounts cost less than mutual funds, they also don't offer the same benefits, like the big public disclosures to the SEC or portability into non-institutional accounts like IRAs. And if Vanguard, with its unique mutually-owned structure, charges less for a separate account than for a mutual fund of the same strategy, it's because it costs Vanguard less to run the separate account. So a counter argument to the suit and to the ideas within is that with mutual funds you pay more and you get more.

It's still early days, as the complaint was just filed on December 29. 401(k) industry insiders and fundsters will be watching with baited breath. 

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

5.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2022: Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


  1. Irish Funds Annual Global Funds Conference 2022, May 30-31
  2. WealthManagement Edge, May 31 - June 3
  3. MFDF 2022 Fund Governance and Regulatory Insights Conference, Jun 8-9
  4. 28th annual Expect Miracles East Coast Classic, June 9
  5. 2022 Sohn Investment Conference, June 9
  6. IDC webinar - Cybersecurity for Fund Boards: The Current Landscape, June 9
  7. MMI webinar - Driving Business Value with Artificial Intelligence & Data, June 15
  8. MFDF webinar - Key Takeaways From Morningstar's 2021 Annual Fund Fee Study, June 16
  9. MFDF Director Discussion Series - Open Forum (Chicago), June 21
  10. 2022 MMI Emerging Asset Managers Forum, June 23
  11. MFDF In Focus: Capitol Hill, A Conversation with Congressman Bryan Steil, June 28
  12. Financial Planning INVEST, Jun 28-29
  13. MFDF webinar - Differentiating Mutual-Fund-to-ETF Conversions, July 19
  14. MFDF Director Discussion Series - Open Forum (New York), July 20
  15. 2022 MMI Distribution Leadership Forum, Jul 20-21
  16. MFDF webinar - Fund Boards' Oversight of Investment Performance, July 28
  17. MFDF webinar - Performance, Perception and Manager Selection, September 14
  18. 2022 ICI Tax and Accounting Conference, Sep 18-21
  19. 5th annual Expect Miracles Atlantic Coast Classic, October 3
  20. Nicsa Fearless Leadership Symposium, Oct 6-7
  21. 2022 MMI Annual Conference, Oct 19-21
  22. 2022 IDC Fund Directors Conference, Oct 24-26
  23. 18th annual Expect Miracles Wine & Spirits Event, October 27
  24. Nicsa 2022 General Membership Meeting, October 31 - November 2
  25. Tiburon CEO Summit XLIII, Nov 7-9
  26. 2022 ICI Tech Summit, Nov 8-9




©All rights reserved to InvestmentWires, Inc. 1997-2022
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use