90% of our savings is in a 401k. A very large portion is in the "John Hancock Fixed Income Fund". Is there any protection for this money? I'm not talking about protection against a drop in the interest rate, I mean if JH goes down the tubes does our money go with it?
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Can't answer without more information on exactly that the investment is.
Is it a mutual fund that JH manages? If so, then JH going down the tubes won't affect things, since the fund is a legally-separate entity than JH.
On the other hand, if it is actually something backed by JH itself, then yes, your money could be at risk if JH takes the dirt nap.
-- Rich Carreiro snipped-for-privacy@rlcarr.com
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The question is this, what is it invested in? And you may have a tough time getting an answer to that. Fixed income may include mortgage based products that are subject to the current market issues, although I believe if there were any exposure, you'd have seen some price impact already. You need to get more details as a search for "John Hancock" "Fixed Income Fund" yields nothing for me. It may be a fund created for your 401(k).
To answer the second half of your question, JH can go down the tubes and your money may be safe if the assets within the fund are safe. A good fund inside a failing investment house can survive unscathed.
JOE
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You have several entities involved here. First off, your employer (and those who have a claim on your employer's assets) have no claim on the assets in the 401k. Second, the administrator of the 401k doesn't either. Third, the funds the 401k are invested in are (generally) share classes of mutual funds. A mutual fund is a distinct corporation - separate from both the manager of the fund and the parent company which sponsored the creation of the fund. If SomeFundX is a fund offered by SomeFundCompany and subadvised (managed) by SomeManagerCompany, both SomeFundCompany and SomeManagerCompany could go under completely and the assets held by SomeFundX itself are untouched. In general, at worst, some other company would take over the responsibilities in managing the assets and another company may take over other duties (ie. acting as transfer agent), perhaps ultimately merging the assets into some other fund to simplify matters (in which case, your SomeFundX shares may be swapped for SomeOtherFundX shares).
Your assets are generally as safe as whatever the fund itself - internally - is invested in. Which isn't to say that you can't lose money - but that'd generally be due to the assets inside the fund stinking (ie. suppose your fund held Bear Sterns bonds...), not due to the management company (or your employer, or your plan's administrator) going under. At least with respect to a typical 401k invested in institutional class shares of typical mutual funds.
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I don't think it really matter what the name of the fund is. I think the general question is, for funds that's managed by a company (John Hancock, Fidelity, Vanguard, Schwab, whatever), the OP's question is, if the management company goes belly up, is the money invested in that fund safe.
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The way you phrase it, no. If an investment house is found to have stuffed CMOs (mortgage backed debt) into money market funds to juice their returns, if the funds take a huge hit the ripple effect may take down the firm. So we are back to the name of the fund to understand its prospectus and confirm its contents. If JF has a fund consisting of nothing but treasuries (for example), JF can very well go under and that fund is still fine. Not to pick your syntax (the if/then statement you offer) but we need to be clear why they went under before commenting on the safety of the funds they manage.
Joe
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You asked this same question in March 2007. The consensus as that time was that you are in no danger. Have things changed that you know about?
Elizabeth Richardson
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Elizabeth, 'fixed income' is too generic for me to be comfortable with your response. Given the events of the last few months, I'd not offer any confidence level without knowing the make up of that fund. So far, I am unable to find that detail, and surmise that this fund is an institutional fund sold to 401(k) clients. Joe
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Joe, her fear is whether or not JH will go belly-up. She is an employee of JH. While I understand that things in the fixed income market have changed in the past year, her fears are the same as a year ago. She works for JH and somehow she is being made to feel, as an employee, that the company is not doing as well as their financial reports indicate. My response to this particular poster is not original: We have nothing to fear but fear itself.
Elizabeth Richardson
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Ok, now that I sorted on 'sender' I see the old threads. She was no longer with JF, and asked about rolling to an IRA. For a self-described nervous investor, she left herself in a 401(k) when an IRA holding government notes/bonds would have been better for her risk tolerance.
While I agree that one needs to view the fund manager's stock as distinct from the funds themselves, I still need to be cautious with any fund using the words 'fixed income'.
Joe
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I don't have her older post handy, but from this current one, it wasn't obvious that she worked for JH, but rather that her 401k fund was invested in a JH fund.
Either way, the money in the 401k is safe inasmuch as her ownership of whatever investment she holds in the
401k is not subject to creditors of JH. As to what the fund itself holds, those assets themselves may be risky, but if it's a decent and diversified portfolio, that shouldn't be a problem either.
If her 401k was invested in her employer's stock (a la Enron), then of course, that portion of her 401k investments are very risky. Not that creditors would take her 401k, but that the contents itself - the stock - may become worthless. That's why one ought hold a minimum of one's employer stock in a 401k. And has nothing to do with whether one ought to avoid investing in funds managed by your employer (if your employer manages funds) in your 401k.
Perhaps the OP will pipe up and clarify exactly what her situation is and what, specifically, she's worried about.
[I just dug up her older post and it asks what happens if her employer goes bankrupt. The answer, as before, remains - no - assets in the 401k are separate and safe from your employer's creditors. The only thing specifically in danger there is if you hold your employer's stock itself in the 401k. Nobody will take the stock away, it just may become worthless. At worst, you may have a hard time accessing your account for a while while management gets straightened out and administration is passed along to someone else]
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