Originally posted December 29, 2010I just ran into a rebalancing issue with Employee Fiduciary's 401k platform. My personal setup has automatic rebalancing enabled for every 3 months on the 25th. Easy breezy -- except we had a
fund change from VFITX to VSIGX on the 22nd. While the Signal share upgrades within the same funds (e.g. Value Investor to Value Signal) happened immediately, VFITX to VSIGX required a full sell + buy and didn't complete until the 27th.
Well you can guess what happened. During this time from the 22nd to the 27th, my existing balancing in VSIGX showed a pending status with 0% as the balance. So when my rebalancing transaction happened on the 25th, a big chunk from every other fund was sold in order to bring up this balance to 20%. And when the pending transfer finalized, the total jumped up to 36%. Ooops?
I tried to immediately reallocate holdings back to my original 20% but the system's market timing rules blocked my transactions. (You cannot manually buy back into Vanguard funds until 60 days after a sale.) For now, I've changed my new contributions to ignore VSIGX and will attempt another manual rebalancing in February. I also fired off an email to EFC to see if these limits can't be lifted for my case and am awaiting a response.
Luckily, it is only Treasuries -- the least volatile option on our plan. Unluckily, everybody is on the edge about interest rate increases.
Updated January 8, 2011
I didn't have time to update this entry before my trip to Hong Kong. EFC emailed me saying their operations group reviewed my bug report and rebalanced my funds to my target allocations as of the 25th. I logged into my account and saw the transfer transactions with settlement dates as of 1/3/2011. The markets didn't do much in that period so no harm, no foul.
(Filed in retirement plans)
Rebalancing Issue with Employee Fiduciary
Posted by Mossy
January 8, 2011 8:33 AM
I just ran into a rebalancing issue with Employee Fiduciary's 401k platform. My personal setup has automatic rebalancing enabled for every 3 months on the 25th. Easy breezy -- except we had a fund change from VFITX to VSIGX on the 22nd. While the Signal share upgrades within the same funds (e.g. Value Investor to Value Signal) happened immediately, VFITX to VSIGX required a full sell + buy and didn't complete until the 27th.
Well you can guess what happened. During this time from the 22nd to the 27th, my existing balancing in VSIGX showed a pending status with 0% as the balance. So when my rebalancing transaction happened on the 25th, a big chunk from every other fund was sold in order to bring up this balance to 20%. And when the pending transfer finalized, the total jumped up to 36%. Ooops?
I tried to immediately reallocate holdings back to my original 20% but the system's market timing rules blocked my transactions. (You cannot manually buy back into Vanguard funds until 60 days after a sale.) For now, I've changed my new contributions to ignore VSIGX and will attempt another manual rebalancing in February. I also fired off an email to EFC to see if these limits can't be lifted for my case and am awaiting a response.
Luckily, it is only Treasuries -- the least volatile option on our plan. Unluckily, everybody is on the edge about interest rate increases.
Updated January 8, 2011
I didn't have time to update this entry before my trip to Hong Kong. EFC emailed me saying their operations group reviewed my bug report and rebalanced my funds to my target allocations as of the 25th. I logged into my account and saw the transfer transactions with settlement dates as of 1/3/2011. The markets didn't do much in that period so no harm, no foul.
(Filed in retirement plans)
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