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
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?