MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
Investor Alert

New York Markets Close in:

need to know
When do markets close for Labor Day?
Netflix stock heads toward fifth straight loss
ISM services index slows, but tops forecast
Jobless claims rise to two-month high
U.S. trade deficit shrinks 7.4% to $41.9 billion
Europe markets rise | FTSE 100 heads for gain
L.L. Bean longtime CEO Leon Gorman dies
Treasury's Lew irked by China's FX move

Why maternity leave is shrinking
Blame Marissa Mayer for maternity-leave shrink

Chaos at Budapest train station as migrants rush trains
Syrian refugees reach Norway — via the Arctic

Dovish Draghi signals ECB willing to do more QE

Video: Watch China’s 90-minute military parade in 60 seconds
Watch China’s    90-minute parade in 60 seconds
Xi talks peace, but China parade flexes power
China markets close for war anniversary

Tom Brady's 'Deflategate' suspension overturned by judge, AP reports
Tom Brady’s ‘Deflategate’ suspension overturned
The real Deflategate verdict? NFL’s in trouble

Donald Trump tells Kareem Abdul-Jabbar: ‘You don’t have a clue about life’
Trump’s new feud is with Kareem Abdul-Jabbar

The flat tax and two other policies that separate Ben Carson and Donald Trump
3 policies that divide Ben Carson, Donald Trump

Caroline Baum: No one knows what Trump would do as president, but it’d be great!
What Trump would do as president: It’d be great

Trump, Clinton play liar’s poker: Delamaide

These are the college majors that are dying

They tangled with student debt all summer
College help for low-income families

As investment risk has changed, so should investors’ portfolios
Investment risk has changed, so this must change too

The search for 1,000 angels to help women create startups
The search for 1,000 angels to help women startups

43% of U.S. homes are at high risk of natural disaster
43% of U.S. homes are at high risk of natural disaster

Why the British Hugo Chavez will be good for the economy
Why the U.K. Hugo Chavez will be good for its economy

Bill Gross calls a Fed rate hike ‘too little, too late’
FDIC chief: Rates may catch banks off-guard
Junk-bond stress level climbs to 5-year high

Why India is worth a look if you’re cooling on China

History’s lessons in surviving market crashes

Apple’s biggest challenge: Topping the iPhone 6
Apple set to join content contest
What to expect from the Apple event on Sept. 9

/conga/frontpage.html 354072

Markets »

44.17MDow Volume:
Avg Vol: 113.01M
Unchanged
189
Decliners
2102
Advancers
4140
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,444 +92 0.56%
Nasdaq
/quotes/zigman/12633936/realtime 4,762 +12 0.25%
S&P 500
/quotes/zigman/3870025/realtime 1,960 +11 0.59%
GlobalDow
/quotes/zigman/629063/realtime 2,331 +18 0.76%
Gold
/quotes/zigman/662444/delayed 1,124 -10 0.87%
Oil
/quotes/zigman/2331095/delayed 47.22 +0.97 2.10%
FTSE 100
/quotes/zigman/3173262/delayed 6,194 +111 1.82%
DAX
/quotes/zigman/2380246/delayed 10,318 +270 2.68%
CAC 40
/quotes/zigman/3173214/delayed 4,654 +99 2.17%
FTSE MIB
/quotes/zigman/1482176/delayed 22,177 +565 2.62%
IBEX 35
/quotes/zigman/2759620/delayed 10,042 +104 1.05%
Stoxx 600
/quotes/zigman/2380150/delayed 362 +8 2.37%
Asia Dow
/quotes/zigman/6959860/realtime 2,714 +11 0.40%
Nikkei 225
/quotes/zigman/5986735/delayed 18,182 +87 0.48%
Hang Seng
/quotes/zigman/2622475/delayed 20,935 -250 1.18%
Shanghai
/quotes/zigman/1859015/delayed 3,160 -6 0.20%
Sensex
/quotes/zigman/1652085/delayed 25,765 +311 1.22%
Singapore
/quotes/zigman/1709939/delayed 2,906 +28 0.98%
Euro
/quotes/zigman/16008136/realtime/sampled 1.11 -0.01 0.98%
Yen
/quotes/zigman/16008150/realtime/sampled 120.01 -0.32 0.26%
Pound
/quotes/zigman/16008140/realtime/sampled 1.53 0.00 0.32%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.70 0.00 0.14%
DXY Index
/quotes/zigman/1652083/delayed 96.40 +0.42 0.44%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.81 +0.25 0.28%
U.S. 10yr
/quotes/zigman/15866666/realtime 2.17 -0.02 0.85%
German 10y
/quotes/zigman/15866409/realtime 0.73 -0.06 7.14%
Italy 10yr
/quotes/zigman/15866497/realtime 1.92 -0.07 3.70%
Spain 10yr
/quotes/zigman/15866444/realtime 2.11 -0.04 1.85%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.80 -0.02 0.97%
Japan 10yr
/quotes/zigman/15866525/realtime 0.40 +0.00 0.13%
Crude Oil
/quotes/zigman/2331095/delayed 47 +1 2.10%
Gold
/quotes/zigman/662444/delayed 1,124 -10 0.87%
Corn
/quotes/zigman/7599553/delayed 362 -6 1.50%
DJIA F
/quotes/zigman/38649152/delayed 16,419 +89 0.55%
S&P F
/quotes/zigman/30356461/delayed 1,956 +9 0.47%
Silver
/quotes/zigman/3134148/delayed 15 0 0.15%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 88.96 -0.93 -1.03%
AAPL /quotes/zigman/68270/composite 111.29 -1.05 -0.94%
GOOG /quotes/zigman/30194416/composite 612.12 -2.22 -0.36%
BAC /quotes/zigman/190927/composite 16.00 0.15 0.95%
C /quotes/zigman/5065548/composite 52.12 0.37 0.71%
F /quotes/zigman/264304/composite 13.91 0.04 0.25%
T /quotes/zigman/398198/composite 33.09 0.27 0.83%
BP /quotes/zigman/247026/composite 32.50 0.30 0.93%
GE /quotes/zigman/227468/composite 24.64 0.07 0.28%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
Please log in to view your watchlist
MarketWatch Portfolio

World News from MarketWatch

Rates »

5 yr CD
1.5%
2 yr CD
0.8%
1 yr CD
0.6%
MMA $10K+
0.3%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.62% 11.62% 11.53%
Business 12.85% 12.85% 12.85%
Student 13.14% 13.14% 13.14%
Balance Transfer 14.12% 14.12% 14.00%
Airline 15.10% 15.10% 15.15%
Reward 15.14% 15.14% 14.99%
Cash Back 15.27% 15.27% 15.26%
Instant Approval 18.00% 18.00% 17.93%
Bad Credit 22.73% 22.73% 22.48%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/92224/composite ALNY-2.63%
  • /quotes/zigman/307926/composite SNY+0.85%
  • /quotes/zigman/133914/composite LCI+15.99%
  • /quotes/zigman/7601800/composite JOY-16.15%
  • /quotes/zigman/233874/composite MEI+22.31%
X
Powered by StockTwits
Link to MarketWatch's Slice.

As of July 2, 2013, the SmartMoney content you loved now lives on MarketWatch.

MarketWatch will continue to provide the same important news and information you rely on every day. And, as a MarketWatch user, you will be able to enjoy:

  • Personalized news and quote email alerts
  • Editorial e-newsletters about personal finance, mutual funds and market-specific coverage
  • Premium newsletters by our market experts
  • Games, such as Virtual Stock Exchange and Beat the Darts
  • Free WSJ.com registration

Email address

Password

Forgot password?

SmartMoney Blogs

Encore
A blog about living in and planning for retirement

One More 401(k) Expense – Trading Costs

Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.

As discussed in a recent post, the explicit fees of providing 401(k) plans fall into two categories – those associated with administration of the plan (record keeping, legal work, and accounting) and those associated with investment management. Neither employers nor employees have any real idea how large these fees are.

Fortunately, the Department of Labor will now require: 1) companies administering 401(k) plans to disclose to the sponsor all the costs associated with administering the plan; and 2) plan sponsors to provide participants with expense ratios for investments offered by the plan.

While the disclosure is a great step forward, the investment costs reported by plan sponsors are only a portion of the total costs absorbed by the participant. The numbers reported will be the explicit fees paid by 401(k) participants (expressed as an amount per $1,000 invested). But participants in 401(k) plans also pay the trading costs incurred by mutual funds. Prior studies of actively managed equity mutual funds find their trading costs are about as large as their explicit fees.

Mutual funds face two types of trading costs: commissions and price concessions. Funds report commissions in supplements to their annual reports. They do not report the price concessions they pay to trade securities.

The price concessions can be substantial because orders submitted by mutual funds tend to move prices. Because dealers commit to buying or selling stocks at their quoted prices, they are prone to being exploited by better informed traders, a risk they cover by setting low bid and high ask prices. The less visible opportunity cost of delayed or missed trades likely exceeds commissions.

Both components of trading cost are included in the effective prices a fund pays or receives for securities. That is, they reduce the value of the fund’s assets as trades occur.

Trading costs within 401(k) plans are important for at least two reasons. First, trading costs can be a substantial drag on performance, especially for very actively managed equity funds. After allowing for the sum of trading costs and other fees, studies find that most mature equity funds generally fail to match the performance of a market index fund.

Second, trading costs can transfer wealth among different types of investors within an investment fund. Investors share the trading costs in proportion to their investment in the fund. If all investors traded their shares in the fund equally frequently and in proportion to their balances, then this sharing of the fund’s trading costs would be equitable. But, when some of the fund’s investors trade more aggressively than others, the aggressive investors pay less than their fair share.

The point of this discussion is that 401(k) plans can involve very large costs. And very large fees dramatically erode retirement assets. If fees amount to 1 percent of assets each year over a 40-year work life, then fees reduce assets at retirement by about 25 percent. Participants can minimize their costs by sticking to index funds, which involve substantially lower fees and less trading than actively managed funds.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 8)

View all Comments »
    • #55I have money moved from 401k funds to secured money makret and bonds.Not in stocks for over a year.I kept new contributions in the stock fund .This is what I did before the bubble burst,so I did not get hit when the makret crashed.I recently moved $3ok into stock funds.I started when the S&P hit 1260 and kept moving funds into stock fund each time it was going down.

    • Forex is top largest makret in the world. Foreign exchange totally deals in real time. Compare to any other financial makret in world, forex makret have huge volume of buyers and sellers. It is open for whole 24 hours, which gives a great advantageous to the businessperson. While doing your job you also trade in forex as it does not require any definite time so that you can double your income. Was this answer helpful?

    • Morganovich,Thank you for your kind words. I don’t think that the current avsieron to immigrants is necessarily based on our growing welfare state. Historically, immigrants were feared and disliked and immigration controls have existed throughout at least the 20th century here. As I’m sure you know, racism and xenophobia is the norm in Europe. They all hate each other and everyone else. That’s not a result of socialism – they’ve always been that way. But, I have no doubt that socialism intensifies those clan feelings.Mr. Methinks has maintained his other citizenship and I will get one from Nevis as soon as I get a chance to fly down there and make the required investment. I’ve long had my eye on it.i would hate to give up us citizenship, but there’s a price at which i would.Ditto. How sad that I even have an exit strategy. I fear that only the early movers will be able to get away. The U.S. can always change the law and there will be no push back from the public as we will be painted as treasonous bastards unwilling to pay our “fair share”.

    • DOL’s new 401(k) disclosure regulations will require investment options to disclose portfolio turnover rate, which helps identify which funds turn over their holdings more frequently, and therefore identify which will probably bear higher trading costs (which ultimately reduces performance). But buying index funds isn’t a guarantee that you will pay lower trading costs. If an index fund has a volatile investor base that results in cash flowing in and out of the fund, then the index fund could have just as high trading costs as a buy and hold active manager with a stable investor case since the index fund manager has to sell holdings to redeem investors and rebuy the same holdings when new investors buy into the fund. There is also an economic incentive to pay lower trading costs because it hurts the fund’s bottom line performance. Given these variables, trading costs is but one of many factors to evaluate, but shouldn’t be the primary focus of any one’s investment decision. And making the claim that index funds are always cheaper doesn’t take into account these other factors.

    • like Beverly responded I didn’t know that a person able to get paid $5217 in 1 month on the internet. did you see this site (Click on menu Home more information) http://goo.gl/ZHPH7

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
Investor Alert

New York Markets Close in:

need to know
When do markets close for Labor Day?
Netflix stock heads toward fifth straight loss
ISM services index slows, but tops forecast
Jobless claims rise to two-month high
U.S. trade deficit shrinks 7.4% to $41.9 billion
Europe markets rise | FTSE 100 heads for gain
L.L. Bean longtime CEO Leon Gorman dies
Treasury's Lew irked by China's FX move

Why maternity leave is shrinking
Blame Marissa Mayer for maternity-leave shrink

Chaos at Budapest train station as migrants rush trains
Syrian refugees reach Norway — via the Arctic

Dovish Draghi signals ECB willing to do more QE

Video: Watch China’s 90-minute military parade in 60 seconds
Watch China’s    90-minute parade in 60 seconds
Xi talks peace, but China parade flexes power
China markets close for war anniversary

Tom Brady's 'Deflategate' suspension overturned by judge, AP reports
Tom Brady’s ‘Deflategate’ suspension overturned
The real Deflategate verdict? NFL’s in trouble

Donald Trump tells Kareem Abdul-Jabbar: ‘You don’t have a clue about life’
Trump’s new feud is with Kareem Abdul-Jabbar

The flat tax and two other policies that separate Ben Carson and Donald Trump
3 policies that divide Ben Carson, Donald Trump

Caroline Baum: No one knows what Trump would do as president, but it’d be great!
What Trump would do as president: It’d be great

Trump, Clinton play liar’s poker: Delamaide

These are the college majors that are dying

They tangled with student debt all summer
College help for low-income families

As investment risk has changed, so should investors’ portfolios
Investment risk has changed, so this must change too

The search for 1,000 angels to help women create startups
The search for 1,000 angels to help women startups

43% of U.S. homes are at high risk of natural disaster
43% of U.S. homes are at high risk of natural disaster

Why the British Hugo Chavez will be good for the economy
Why the U.K. Hugo Chavez will be good for its economy

Bill Gross calls a Fed rate hike ‘too little, too late’
FDIC chief: Rates may catch banks off-guard
Junk-bond stress level climbs to 5-year high

Why India is worth a look if you’re cooling on China

History’s lessons in surviving market crashes

Apple’s biggest challenge: Topping the iPhone 6
Apple set to join content contest
What to expect from the Apple event on Sept. 9

/conga/frontpage.html 354072

Markets »

44.18MDow Volume:
Avg Vol: 113.01M
Unchanged
189
Decliners
2100
Advancers
4141
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 16,442 +90 0.55%
Nasdaq
/quotes/zigman/12633936/realtime 4,762 +12 0.25%
S&P 500
/quotes/zigman/3870025/realtime 1,960 +11 0.58%
GlobalDow
/quotes/zigman/629063/realtime 2,331 +18 0.76%
Gold
/quotes/zigman/662444/delayed 1,124 -10 0.87%
Oil
/quotes/zigman/2331095/delayed 47.20 +0.95 2.05%
FTSE 100
/quotes/zigman/3173262/delayed 6,194 +111 1.82%
DAX
/quotes/zigman/2380246/delayed 10,318 +270 2.68%
CAC 40
/quotes/zigman/3173214/delayed 4,654 +99 2.17%
FTSE MIB
/quotes/zigman/1482176/delayed 22,177 +565 2.62%
IBEX 35
/quotes/zigman/2759620/delayed 10,042 +104 1.05%
Stoxx 600
/quotes/zigman/2380150/delayed 362 +8 2.37%
Asia Dow
/quotes/zigman/6959860/realtime 2,714 +11 0.40%
Nikkei 225
/quotes/zigman/5986735/delayed 18,182 +87 0.48%
Hang Seng
/quotes/zigman/2622475/delayed 20,935 -250 1.18%
Shanghai
/quotes/zigman/1859015/delayed 3,160 -6 0.20%
Sensex
/quotes/zigman/1652085/delayed 25,765 +311 1.22%
Singapore
/quotes/zigman/1709939/delayed 2,906 +28 0.98%
Euro
/quotes/zigman/16008136/realtime/sampled 1.11 -0.01 0.98%
Yen
/quotes/zigman/16008150/realtime/sampled 120.01 -0.32 0.26%
Pound
/quotes/zigman/16008140/realtime/sampled 1.53 0.00 0.32%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.70 0.00 0.14%
DXY Index
/quotes/zigman/1652083/delayed 96.39 +0.41 0.43%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.81 +0.25 0.28%
U.S. 10yr
/quotes/zigman/15866666/realtime 2.17 -0.02 0.85%
German 10y
/quotes/zigman/15866409/realtime 0.73 -0.06 7.14%
Italy 10yr
/quotes/zigman/15866497/realtime 1.92 -0.07 3.70%
Spain 10yr
/quotes/zigman/15866444/realtime 2.11 -0.04 1.85%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.80 -0.02 0.97%
Japan 10yr
/quotes/zigman/15866525/realtime 0.40 +0.00 0.13%
Crude Oil
/quotes/zigman/2331095/delayed 47 +1 2.05%
Gold
/quotes/zigman/662444/delayed 1,124 -10 0.87%
Corn
/quotes/zigman/7599553/delayed 362 -6 1.50%
DJIA F
/quotes/zigman/38649152/delayed 16,417 +87 0.53%
S&P F
/quotes/zigman/30356461/delayed 1,956 +9 0.46%
Silver
/quotes/zigman/3134148/delayed 15 0 0.15%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 88.96 -0.93 -1.03%
AAPL /quotes/zigman/68270/composite 111.26 -1.08 -0.97%
GOOG /quotes/zigman/30194416/composite 612.12 -2.22 -0.36%
BAC /quotes/zigman/190927/composite 16.00 0.15 0.95%
C /quotes/zigman/5065548/composite 52.12 0.37 0.71%
F /quotes/zigman/264304/composite 13.91 0.04 0.29%
T /quotes/zigman/398198/composite 33.09 0.27 0.83%
BP /quotes/zigman/247026/composite 32.50 0.30 0.93%
GE /quotes/zigman/227468/composite 24.64 0.07 0.28%
Visit the quote page and your most recently viewed stocks will automatically be displayed here.
Please log in to view your watchlist
MarketWatch Portfolio

World News from MarketWatch

Rates »

5 yr CD
1.5%
2 yr CD
0.8%
1 yr CD
0.6%
MMA $10K+
0.3%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.62% 11.62% 11.53%
Business 12.85% 12.85% 12.85%
Student 13.14% 13.14% 13.14%
Balance Transfer 14.12% 14.12% 14.00%
Airline 15.10% 15.10% 15.15%
Reward 15.14% 15.14% 14.99%
Cash Back 15.27% 15.27% 15.26%
Instant Approval 18.00% 18.00% 17.93%
Bad Credit 22.73% 22.73% 22.48%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
  • /quotes/zigman/92224/composite ALNY-1.05%
  • /quotes/zigman/307926/composite SNY+0.76%
  • /quotes/zigman/133914/composite LCI+14.39%
  • /quotes/zigman/7601800/composite JOY-16.43%
  • /quotes/zigman/233874/composite MEI+20.55%
X
Powered by StockTwits
Link to MarketWatch's Slice.

As of July 2, 2013, the SmartMoney content you loved now lives on MarketWatch.

MarketWatch will continue to provide the same important news and information you rely on every day. And, as a MarketWatch user, you will be able to enjoy:

  • Personalized news and quote email alerts
  • Editorial e-newsletters about personal finance, mutual funds and market-specific coverage
  • Premium newsletters by our market experts
  • Games, such as Virtual Stock Exchange and Beat the Darts
  • Free WSJ.com registration

Email address

Password

Forgot password?