AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 8/20/2004 Subject: hello,
thanks very much for...
Question hello,
thanks very much for taking my question. i have a 401k at work and was interested in investing in a low-cost index fund. however, i dont have such a investment choice in my fund. what i do have in my 401k is something called a "U.S. Equity Index Commingled Pool". i do not fully understand what this is and how it differs from a typical s&p 500 index fund and would like to find out. I would appreciate your response. thanks again.
Tom
p.s. below is some information i copied and pasted from my 401k website:
U.S. Equity Index Commingled Pool
Snapshot
Quick Stats
YTD Return (07/31/2004) -0.03%
NAV (08/19/2004) $33.49
52 Week Low-High (08/19/2004) $29.98-$35.24
Net Assets ($M) (07/31/2004) 8,727,272,561.00
Average Annual Total Returns 1 (%)
as of 07/31/2004
S&P 500
Life 10.52 N/A
Life is as of inception date 12/31/1991.
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Overview
What it is
A commingled pool of the Fidelity Group Trust for Employee Benefit Plans (not a mutual fund). Managed by Geode Capital Management.
Goal
The investment objective is to provide investment results that correspond to the total return performance of common stocks publicly traded in the United States.
What it invests in
Under normal conditions, 90% of the pool's universe will be invested in securities of companies which compose the S&P 500 Index. The pool may use futures, index options, and exchange traded funds to enable the pool to remain fully invested, while being able to respond to participant cash flows. While the use of futures, index options, and exchange traded funds has its own risks and could decrease the value of the pool, any use in the pool is limited to controlling overall pool risk and managing cash. Unit price and return will vary.
Who might want to invest in it
• Someone who is seeking capital appreciation and modest dividend income, and who can withstand the fluctuation of the broad U.S. stock market, and accept the risk inherent in common stock investing.
• Someone who wants to try to achieve roughly the same performance as the overall U.S. stock market.
The S&P 500® Index is a registered service mark of The McGraw-Hill Companies, Inc., and has been licensed for use by Fidelity Distributors Corporation and its affiliates. It is an unmanaged index of the common stock prices of 500 widely held U.S. stocks that includes the reinvestment of dividends.
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Fund Manager - Geode Capital Management
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Performance
Cumulative Total Returns 1 (%)
as of 07/31/2004
S&P 500
YTD -0.03 0.02
1 Month -3.32 -3.31
3 Month -0.09 -0.08
6 Month -1.83 N/A
Average Annual Total Returns1 (%)
as of 07/31/2004
S&P 500
Life 10.52 N/A
Life is as of inception date 12/31/1991.
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Quarter-End Average Annual Total Returns1 (%) as of 06/30/2004
1 Year 19.02
3 Year -0.86
5 Year -2.23
10 Year 11.83
Life 10.52
Life is as of inception date 12/31/1991.
The performance data featured represents past performance, which is no guarantee of future results. Share price, yield and return will vary and you may have a gain or loss when you sell your shares.
Mutual fund performance fluctuates and currently may be significantly lower than stated. Periods of market strength may not be repeated.
Quarter-End returns include all applicable recurring and non-recurring fees (including short-term trading or redemption fees) and changes, if any.
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Historical Fund Performance
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Volatility Measures
as of 07/31/2004
Beta: 1.00 R² 1.00 Standard Deviation: 16.44
Beta and R² values are calculated based on the Standard & Poor's 500 Index.
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Holdings
Top Ten Holdings 2 as of 06/30/2004
GENERAL ELECTRIC CO
MICROSOFT CORP
EXXON MOBIL CORP
PFIZER INC
CITIGROUP INC
WAL MART STORES INC
AMER INTL GROUP INC
INTEL CORP
BANK OF AMERICA CORPORATION
JOHNSON & JOHNSON
22.20% of the portfolio
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Asset Allocation 2 as of 07/31/2004
07/31/2004
Equities 100.0%
Foreign 0.9%
Answer Tom--
A commingled fund doesn't differ much from a normal open-end fund--it just allows more accounts to enter.
And the index fund you describe has performed pretty much in line with the S&P 500, though a little behind because of expenses.
It's a good choice for you, I think. An index fund is well diversified. It has good companies (as someone said, index funds tend to be somewhat actively managed). And the expenses are very reasonable.
