My company is changing providers again. This is the third time in 4 years. There are a variety of good reasons for this. Each time a new set of funds is provided and there is enough of a choice that I'm not upset. However, I am curious of the overall loss I may be facing by having to dump my portfolio every 15 months. In some cases, the market was down and I had to sell out of it at a loss to go over to the new funds. What are the cons of this kind of change? Thank you

  • 3
    Third time in 4 years? What could a good reason be for this? It sounds like someone at your company isn't doing their homework. Jan 25 '14 at 16:33
  • It could work in your favor. They may be shopping for plans with lower expenses.
    – JohnFx
    Jan 26 '14 at 19:28

In theory, you will lose the return on the time the money is 'between funds.' Hopefully, the transfer is fast, and the time, very short. If we round up and say the average return is 12%/yr, you're looking at about .25% per week of loss.

In reality, it will always seem like this is occurring during a time the market rose 3% during that week.

I would hope that each move is to reduce overall expenses within the fund and would ask you, does the employer match any of your deposits, and after the last move, what kind of fees are you paying? i.e. what are the expenses for the funds you've chosen?

  • Thanks for the above. So apart from the down time, there isn't a general rule about moving portfolios? I was thinking that some of my funds are going to up, some down. For the ones that are down, I'm being forced to sell low and purchase another fund. That might not necessarily be a sell low buy high situation, but the funds will certainly be different. Thanks again for any thoughts. Jan 26 '14 at 0:42
  • If you are moving into a similar fund, we are describing the same phenomenon with different words. Not two different effects. Jan 26 '14 at 1:20

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