Retirement Income ETFs vs. Income Mutual Funds: An Update
09/11/2011 0 comments
We first compared asset allocation portfolios using dividend ETFs (and bond ETFs) and those using income mutual funds on SeekingAlpha.com Retirement Income Investing: ETFs vs. Mutual Funds more than two months ago. Let's review these two plans: Retirement Income ETFs and Schwab Income Mutual Fund Select List.
Here are the asset classes covered by the two plans:
| The list of minor asset classes covered by Retirement Income ETFs | The list of minor asset classes covered by Schwab Income Mutual Fund Select List |
|---|---|
| Diversified Emerging Mkts: EEM, VWO, DEM Emerging Markets Bond: EMB, PCY Equity Energy: AMJ Foreign Large Value: PID, IDV Global Real Estate: RWX High Yield Bond: HYG Inflation-protected Bond: TIP Intermediate Government: IEI Intermediate-term Bond: CIU, CORP, MBB Large Blend: VIG Large Value: DVY, SDY, VYM, FVD Long Government: IEF, TLT Long-term Bond: LQD, VCLT Mid-cap Value: PEY Miscellaneous Sector: PFF Muni National Long: MUB Muni Short: SHM Real Estate: IYR, ICF, VNQ Short Government: SHY Short-term Bond: CSJ, VCSH World Bond: BWX, WIP |
Emerging Markets Bond: TGINX Foreign Large Blend: SICNX, LISOX Foreign Large Value: AAIPX High Yield Bond: STHTX, MWHYX Inflation-protected Bond: ACITX Intermediate Government: SWGSX, CPTNX Intermediate-term Bond: SWIIX, SAMFX, PTTDX, PGBOX, MWTRX, FTRFX Large Blend: SWANX, TICRX, PRBLX Large Growth: SWLSX, JENSX Large Value: TWEIX, PQIAX Mid-cap Blend: NMMCX Mid-cap Value: ARDEX Multisector Bond: PONDX Muni National Interm: SWNTX, TWTIX, STTBX Muni National Long: NOTEX, ACLVX Muni Short: FSHIX Real Estate: CSRSX Short Government: FIGTX Short-term Bond: FSTIX, ACSNX Ultrashort Bond: SIGVX World Bond: PFODX |
| Asset Class | Retirement Income ETFs | Schwab Income Mutual Fund Select List | ||
|---|---|---|---|---|
| REITs | 4 | 1 | ||
| Fixed Income | 19 | 24 | ||
| Sector Fund | 2 | 0 | ||
| Foreign Equity | 2 | 3 | ||
| Emerging Market Equity | 3 | 0 | ||
| US Equity | 6 | 9 | ||
| Other | 0 | 0 | ||
| Total | 36 | 37 |
Little in the two plans' investment choice ratings has changed since then. As of Sep 9, 2011, Retirement Income ETFs investment choice is rated as average and Schwab Income Mutual Fund Select List investment choice is rated as above average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:
| Attribute | Retirement Income ETFs | Schwab Income Mutual Fund Select List | ||
|---|---|---|---|---|
| Diversification | great (95%) | great (85%) | ||
| Fund Quality | below average (29%) | great (85%) | ||
| Portfolio Building | above average (67%) | above average (71%) | ||
| Overall Rating | average (64%) | above average (80%) |
Performance chart (as of Sep 9, 2011)
Performance table (as of Sep 9, 2011)
| Portfolio Name | 2011 YTD | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|---|
| Retirement Income ETFs Tactical Asset Allocation Moderate | 2.49% | 8% | 80% | 11% | 84% | 10% | 71% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | -1.16% | 5% | 42% | 5% | 23% | 3% | 14% |
| Schwab Income Mutual Fund Select List Tactical Asset Allocation Moderate | 3% | 9% | 84% | 11% | 101% | 10% | 92% |
| Schwab Income Mutual Fund Select List Strategic Asset Allocation Moderate | -2.11% | 4% | 35% | 4% | 27% | 3% | 16% |
Refer to detailed portfolio comparison.
Again, we are seeing income ETFs can still rival the well selected income mutual funds. This is a good news for income investors in their IRA investments or taxable account investments. ETFs have more flexibility and have a well defined and simple indexing strategy (isn't this what MyPlanIQ is also doing?).
Disclosure:
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
Symbols: SPX, VIG, DVY, SDY, ICF, RWX, HYG, LQD, IEF, TLT, TIP, AMJ, TWEIX, LISOX, CSRSX, PTTDX, Retirement Investments, IRAs, ETF Portfolios, Portfolio Management, Risk Management, Dividend ETFs
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