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*:5 Yr Annualized Return of TAA Moderate Portfolio

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Retirement Investing News and Articles

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Articles on BWX

  • Retirement Income Portfolio Building Using ETFs and Asset Allocation Strategies

    11/12/2010

    Building a steady and safe income producing portfolio is paramount to retirees. High yield stocks, preferred stocks, convertibles and bonds are the basic building blocks for such portfolios. Research results indicate that blue chip stocks with high dividends, unlike highly volatile and low dividend or no dividend stocks (such as many high tech stocks and small company stocks), have produced comparable or even slightly higher returns with less risk in long term. 

    In this article, we present a high income investment plan (Retirement Income ETFs) that is based on asset allocation strategies. Both MyPlanIQ Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA) strategies are used to construct model portfolios. 

    This plan is designed for income producing purpose: high dividend (yield) stock ETFs are chosen for both US stocks and international stocks asset classes. We have decided to use general emerging market stocks ETFs (EEM or VWO) instead of some thinly traded high dividend emerging market stock ETFs. This situation will be changed once the high yield emerging market stock ETFs become more liquid and tradable. 

    The plan uses 34 ETFs that represent the following five key asset classes:

    U.S. stocks: VIG, DVY, SDY, FVD, VYM, PEY, PFF

    International stocks: PID, IDV

    Emerging market stocks: EEM, VWO

    Real Estate Investment Trusts (REITs): IYR, ICF, VNQ, RWX

    Fixed Income: 

    • US Fixed Income:  HYG, LQD, VCLT, CIU, CORP, CSJ, VCSH, IEI, IEF, SHY, TLT, TIP, MBB, MUB, SHM
    • International Fixed Income: BWX, EMB, PCY, WIP

    Notice that preferred stocks PFF is classified under U.S. stocks. 

    We compared the back tested performances of the SAA and TAA moderate model portfolios with the corresponding SIB (Simpler Is Better) five core asset ETF portfolios. As of 11/9/2010, the performance is: 

    Performance table (as of Nov 10, 2010)

    From the above chart, one can see that since the portfolio inception (12/31/2000),the Retirement Income ETFs Strategic Asset Allocation Moderate has outperformed its corresponding Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate while in the meantime, the Retirement Income ETFs Tactical Asset Allocation Moderate has outperformed its corresponding Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate. In fact, in the past ten years, the Retirement Income portfolios had lower standard deviation than the Five Core SIB. Please visit the corresponding portfolios for more detailed performance information. 

    Currently, the SAA Moderate Portfolio has the following holdings and yields:

    Asset ETFs Allocation Yield
    REAL ESTATE ICF (iShares Cohen & Steers Realty Majors) 11.96% 2.88%
    FIXED INCOME LQD (iShares iBoxx $ Invest Grade Corp Bond) 18.40% 4.80%
    Emerging Market VWO (Vanguard Emerging Markets Stock ETF) 13.31% 1.20%
    US EQUITY DVY (iShares Dow Jones Select Dividend Index) 5.92% 3.53%
    US EQUITY PEY (PowerShares HighYield Dividend Achievers) 4.87% 4.28%
    INTERNATIONAL EQUITY IDV (iShares Dow Jones Intl Select Div Idx) 16.50% 4.25%
    High Yield Bond HYG (iShares iBoxx $ High Yield Corporate Bd) 16.47% 8.40%
    INTERNATIONAL BONDS BWX (SPDR Lehman Intl Treasury Bond) 12.57% 0.70%
    Total Yield     4%

    Compared with current sub-zero interests in a cash account, the above portfolio's yield is very attractive. 

    In conclusions, using effective asset allocation strategies (especially the tactical asset allocation strategy), one can build an income producing portfolio that is less risky and achieve higher returns. Retirees or anyone who needs supplemental income can benefit from learning more on these investment plans.


    labels:investment,

    Symbols:VIG,DVY,SDY,FVD,VYM,PEY,PFF,SPY,IWM,PID,IDV,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,RWX,HYG,LQD,VCLT,CIU,CORP,CSJ,VCSH,IEI,IEF,SHY,TLT,TIP,MBB,MUB,SHM,AGG,BND,BWX,EMB,PCY,WIP,


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  • ETF Based Major Asset Class Trend Indicators For The Week of November 8

    11/08/2010

    MyPlanIQ tracks major asset classes trend movement. Major asset trends provide insights into underlying economic and market segments and are critical to tactical asset allocation strategies. We use ETFs that represent the asset class indices. For more information, please visitMyPlanIQ 360 Degree Market View.
     
    The Fed announced $600 billion treasury purchase, the so called QE2 that pushed most risk assets price higher. Risk assets like emerging market stocks, foreign stocks, US stocks, REITs and commodities had risen higher even before the announcement, partly due to QE2 anticipation and partly due to perceived improved economic conditions.

    It is also believed that QE2 will result in US dollar devaluation and that in turns has led so called ‘commodity stockpiling’ propelling Gold and other commodities (such as agricultural commodities) to continue their recent ascent.

    The only major trend change worth watching is the prices of long term treasury bonds, especially 10+ years which have continued weakness. It illustrates the market's belief that in the longer term, the Fed's actions will result in higher inflation. 

    Asset Class Symbol  8-Nov Trend Score Direction
    US Equity REITs  VNQ  57% ^
    Frontier Market Stks  FRN  47% ^
    Emerging Market Stks  VWO  34% ^
    Gold  GLD  32% v
    International REITs  RWX  28% ^
    US Stocks  VTI  25% ^
    Emerging Mkt Bonds  PCY  20% ^
    US High Yield Bonds  JNK  19% ^
    International Developed Stks  EFA  15% ^
    Intermediate Treasuries  IEF  14% ^
    Commodities  GSG  11% ^
    US Credit Bonds  CFT  11% v
    International Treasury Bonds  BWX  8% ^
    Mortgage Back Bonds  MBB  7% ^
    Total US Bonds  BND  6% ^
    Municipal Bonds  MUB  6% ^
    Treasury Bills  SHV  0% ^


    Top Five Indicators

    US REITs have been very strong all year, defying the perception of a weak real estate market. Emerging market and frontier markets continue their recent strength. Gold is approaching its all time high.

    Bottom Five Indicators


    All the bottom five asset classes are fixed income, pointing to an increasing risk appetite. 

    In conclusion, other than long term treasury bonds, assets exhibit their continuous trends and have become stronger since QE2 announcement.

     

    labels:investment,

    Symbols:EEM,VNQ,FRN,VWO,IYR,ICF,GLD,RWX,VTI,SPY,IWM,PCY,EMB,JNK,HYG,PHB,EFA,VEU,IEF,TLT,GSG,DBC,DBA,CFT,BWX,MBB,BND,MUB,SHV,AGG,


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  • TD Ameritrade Commission Free ETFs: Comprehensive Portfolio Building Blocks

    10/19/2010

    TD Ameritrade (Ticker: AMTD) just announced that it offers 100+ commission free ETFs for its clients.The 100+ (a precise number is 101) ETFs were selected by Morningstar that include ETFs from iShares, Vanguard, State Street, PowerShares, and others. In comparison, Schwab's free ETFs include only 11 of its own funds. Similarly, Vanguard offers 47 Vanguard ETFs for free. Fidelity was the first one that offers 25 iShares ETFs for free. See the official TD Ameritrade offering for more details.

    MyPlanIQ views this is a very significant step for small investors (well we are not sure whether TD Ameritrade would still offer such a deal to very large accounts). We have constructed an investment plan TD Ameritrade Commission Free ETFs to take advantage of these ETFs. Though for the trades of these ETFs to be eligible for commission free, TD Ameritrade's customers have to hold these ETFs for more than 30 days, such a restriction is not significant for our plan since the plan only rebalances at most once per month. In this plan, the minimum holding period for each fund is set to be 1 month, which is equivalent to 30 days.

    TD Ameritrade Commission Free ETFs's 401K plan consists of 101 funds. These funds enable participants to gain exposure to 6 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , Commodity , REITs . We view this is the most comprehensive coverage of major asset classes. 

    The list of minor asset classes covered are: 

    COMMODITIES BROAD BASKET: GSG , DBC 
    Conservative Allocation: AOK 
    DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE 
    Emerging Markets Bond: PCY 
    EQUITY: VTI,VT 
    EUROPE STOCK: IEV , VGK , PEF , DEB 
    Foreign Large Blend: EFA , VEU , GWL , PFA 
    Foreign Large Growth: EFG 
    Foreign Large Value: EFV , PID , DWM 
    FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC 
    Foreign Small/Mid Value: SCZ 
    Global Real Estate: IFGL , RWX 
    High Yield Bond: HYG , JNK , PHB 
    Inflation-Protected Bond: TIP 
    Intermediate Government: IEI , VGIT , ITE 
    Intermediate-Term Bond: AGG,CIU , BIV,BND 
    JAPAN STOCK: EWJ , JPP , PJO , DXJ 
    LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX 
    LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG 
    LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV 
    Latin America Stock: ILF , GML 
    LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW 
    Long-Term Bond: CLY,LQD , BLV,VCLT 
    MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV 
    Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW 
    MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU 
    Moderate Allocation: AOM 
    Multisector Bond: AGG,GBF , BND , LAG 
    Muni National Interm: ITM 
    Muni National Long: MUB , TFI , PZA , MLN 
    Muni National Short: SUB , SHM , PVI , SMB 
    PACIFIC/ASIA EX-JAPAN STK: EPP,AAXJ , GMF , PAF , DND 
    REAL ESTATE: IYR,ICF , VNQ 
    SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY 
    Short-Term Bond: CSJ , BSV,VCSH 
    SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA 
    Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK 
    SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT 
    SPECIALTY-REAL ESTATE: RWR , PSR , URE 
    World Allocation: AOR , AOA 
    WORLD BOND: IGOV , BWX,WIP 
    WORLD STOCK: IOO , VT

    As of Oct 15, 2010, this plan 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:

    Diversification -- Rated as great (97%) 
    Fund Quality -- Rated as below average (29%) 
    Portfolio Building -- Rated as great (90%) 
    Overall Rating: above average (74%)

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    REITs:( IYR or VNQ or ICF ) 
    Fixed Income:( AGG or BND ) 
    Commodity:(DBC) 
    Foreign Equity:( EFA or VEU ) 
    Emerging Market Equity:( EEM or VWO ) 
    US Equity:( SPY or VTI ) 
    Performance chart (as of Oct 15, 2010)

    Performance table (as of Oct 15, 2010)

    Portfolio Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe
    TD Ameritrade Commission Free ETFs Tactical Asset Allocation Moderate 13% 87% 13% 86% 20% 128%
    TD Ameritrade Commission Free ETFs Strategic Asset Allocation Moderate 10% 85% -1% -6% 9% 47%
    Six Core Asset ETFs Tactical Asset Allocation Moderate 10% 65% 9% 66% 17% 114%
    Six Core Asset ETFs Strategic Asset Allocation Moderate 11% 84% 2% 9% 9% 42%

     

    To summarize, TD Ameritrade Commission Free ETFs plan is very comprehensive and allows investors to achieve significant performance with reasonable risk. With now all of the top discount brokers (Fidelity, Schwab and TD Ameritrade) offering such commission free ETFs, investors are now free from trading cost and focus on portfolio building in terms of better asset allocation strategies. 

    labels:investment,

    Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,

     

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  • Top Tier ETF Providers Playoffs II

    10/19/2010

    Based on an article published by Bank Investment Consultant by Matt Ackermann, Vanguard, one of the largest index fund and ETF providers, will offer commission-free trading to its brokerage clients that use its lineups of 46 proprietary ETFs. This represents a comparable move as Fidelity and Schwab. 

    In addition to Fidelity and Schwab plans, MyPlanIQ now has a Vanguard major ETF plan. Notice since most Vanguard ETFs have short history, the performance data of the model portfolios are meaningful since 2003 (before that, most ETFs did not exist).

    The following is the list of the ETFs supported in this plan (for up to date info, please see the Vanguard ETF page.

     

      Consumer Discretionary VCR
      Consumer Staples VDC
      Dividend Appreciation VIG
      Emerging Markets VWO
      Energy VDE
      Europe Pacific VEA
      European VGK
      Extended Duration Treasury EDV
      Extended Market VXF
      Financials VFH
      FTSE All-World ex-US VEU
      FTSE All-World ex-US Small-Cap VSS
      Growth VUG
      Health Care VHT
      High Dividend Yield VYM
      Industrials VIS
      Information Technology VGT
      Intermediate-Term Bond BIV
      Intermediate-Term Corporate Bond VCIT
      Intermediate-Term Government Bond VGIT
      Large-Cap VV
      Long-Term Bond BLV
      Long-Term Corporate Bond VCLT
      Long-Term Government Bond VGLT
      Materials VAW
      Mega Cap 300 MGC
      Mega Cap 300 Growth MGK
      Mega Cap 300 Value MGV
      Mid-Cap VO
      Mid-Cap Growth VOT
      Mid-Cap Value VOE
      Mortgage-Backed Securities VMBS
      Pacific VPL
      REIT VNQ
      Short-Term Bond BSV
      Short-Term Corporate Bond VCSH
      Short-Term Government Bond VGSH
      Small-Cap VB
      Small-Cap Growth VBK
      Small-Cap Value VBR
      Telecommunication Services VOX
      Total Bond Market BND
      Total Stock Market VTI
      Total World Stock VT
      Utilities VPU
      Value VTV

    Vanguard ETFs's 401K plan consists of 43 funds. These funds enable participants to gain exposure to 5 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , REITs . The list of minor asset classes covered:

    Communications: IXP , PTE , DGG , LTL 
    Consumer Discretionary: RXI , VCR 
    Consumer Staples: KXI , VDC , PSL , DPN , RHS 
    DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE 
    DIVERSIFIED PACIFIC/ASIA: EPP , VPL , GMF , PAF 
    Equity Energy: ITE,IXC , IPW , DBE , RYE , DKA 
    EUROPE STOCK: IEV , VGK , PEF , DEB 
    Financial: IYF , VFH , IPF , PFI , DRF , RYF 
    Foreign Large Blend: EFA , VEU , GWL , PFA 
    FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC 
    Health: IYH,IXJ , VHT , XBI , PBE , DBR , RYH 
    Industrials: IYJ,EXI , VIS 
    Intermediate-Term Bond: AGG,CIU , BIV,BND 
    LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX 
    LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG 
    LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV 
    LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW 
    Long-Term Bond: CLY,LQD , BLV,VCLT 
    MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV 
    Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW 
    MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU 
    Natural Resources: IYM,IGE , VAW , XLB,XME , PYZ , DBN , RTM , UYM 
    REAL ESTATE: IYR,ICF , VNQ 
    SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY 
    Short-Term Bond: CSJ , BSV,VCSH 
    SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA 
    Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK 
    SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT 
    Technology: MTK , PTF , DBT , RYT , ROM 
    Utilities: GII , PUI , DBU , RYU , UPW 
    WORLD STOCK: IOO , VT

    As of Oct 15, 2010, this plan investment choice is rated as averagebased 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:

    Diversification -- Rated as above average (74%) 
    Fund Quality -- Rated as below average (33%) 
    Portfolio Building -- Rated as average (37%) 
    Overall Rating: average (47%)

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    REITs:( IYR or VNQ or ICF ) 
    Fixed Income:( AGG or BND ) 
    Foreign Equity:( EFA or VEU ) 
    Emerging Market Equity:( EEM or VWO ) 
    US Equity:( SPY or VTI ) 
    Performance chart (as of Oct 15, 2010)

    Performance table (as of Oct 15, 2010)

    Portfolio Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe
    Vanguard ETFs Tactical Asset Allocation Moderate 10% 67% 6% 39% 13% 84%
    Vanguard ETFs Strategic Asset Allocation Moderate 13% 92% 3% 9% 8% 39%
    Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate 10% 65% 7% 48% 15% 103%
    Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate 14% 99% 3% 10% 9% 41%

    Currently, asset classes in REITs( IYR , VNQ , ICF ) , Fixed Income( AGG , BND ) and Emerging Market Equity( EEM , VWO ) are doing relatively well. These asset classes are available to Vanguard ETFs participants.

    To summarize, Vanguard ETFs plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. Currently, the tactical asset allocation strategy indicates overweighing on reits , emerging market equity and fixed income funds.

     

    labels:investment,

    Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,


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  • Top Tier ETF Provider Playoffs

    10/19/2010

    ETF’s continue to broaden their appeal both in terms of flexibility and low cost. With commission free ETF’s, more money stays in the investors pocket rather than disappearing in fees. In addition, while many of these ETF’s have a 30 day minimum hold, this is ideal for long term investing when making changes more often than that can be counter productive.
     
    Four companies offer commission free ETF’s and we are going to compare the offerings in detail to determine which is likely to offer the best value to the investor. 

    In this article we are going to compare Schwab and TD Ameritrade.

    Schwab (Ticker SCHW) is a relative late comer to the ETF party. They offer the fewest ETF’s and the ETF’s have the shortest history. They only provide their own ETF's commission free. However, Schwab has a huge network and powerful brand so we expect Schwab to be a significant player in the market.
     

    Schwab ETF
    NEW Bond ETFs
    Schwab U.S. TIPS ETF™
    Schwab Short-Term U.S. Treasury ETF™
    Schwab Intermediate-Term U.S. Treasury ETF™
    Domestic Equity ETFs
    Schwab U.S. Broad Market ETF™
    Schwab U.S. Large-Cap ETF™
    Schwab U.S. Large-Cap Growth ETF™
    Schwab U.S. Large-Cap Value ETF™
    Schwab U.S. Small-Cap ETF™
    International Equity ETFs
    Schwab International Equity ETF™
    Schwab International Small-Cap Equity ETF™ 
    Schwab Emerging Markets Equity ETF™ 

     
    Notable properties about the Schwab offering
    • The expense ratios are low
    • There are four asset classes with a good choice of funds
    • We would have liked to have seen more choices with other providers
    • We would have liked to have seen funds with a longer history
    • We would expect real estate to be added before long
    • We would expect more choices in the international and emerging market segments before long
    As most of the funds are very new, it’s impossible to do real back testing with the funds. So we have selected a commission efficient portfolio that includes:

    Asset ClassTickerName
    LARGE VALUE SCHV Schwab U.S. Large-Cap Value ETF
    LARGE BLEND SCHX Schwab U.S. Large-Cap ETF
    LARGE BLEND SCHB Schwab U.S. Broad Market ETF
    LARGE GROWTH SCHG Schwab U.S. Large-Cap Growth ETF
    LARGE GROWTH IWF iShares Russell 1000 Growth Index
    SMALL VALUE IJS iShares S&P SmallCap 600 Value Index
    SMALL BLEND SCHA Schwab U.S. Small-Cap ETF
    Small Growth IJT iShares S&P SmallCap 600 Growth
    Foreign Large Blend SCHF Schwab International Equity ETF
    FOREIGN SMALL/MID GROWTH SCHC Schwab International Small-Cap Eq ETF
    DIVERSIFIED EMERGING MKTS SCHE Schwab Emerging Markets Equity ETF
    Inflation-Protected Bond TIP iShares Barclays TIPS Bond
    Intermediate Government IEI iShares Barclays 3-7 Year Treasury Bond
    SHORT GOVERNMENT SHY iShares Barclays 1-3 Year Treasury Bond
    Inflation-Protected Bond SCHP Schwab U.S. TIPS ETF
    SHORT GOVERNMENT SCHO Schwab Short-Term U.S. Treasury ETF
    Intermediate Government SCHR Schwab Intermediate-Term U.S. Trsy ETF
    LARGE VALUE VTV Vanguard Value Index
    LARGE BLEND VTI Vanguard Total Stock Market ETF
    LARGE VALUE VTV Vanguard Value ETF
    DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
    Foreign Small/Mid Value SCZ iShares MSCI EAFE Small Cap Index
    Foreign Large Blend EFA iShares MSCI EAFE Index


    As of Oct 15, 2010, the Schwab ETF investment choice is rated asaverage 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:

    Diversification     -- Rated as below average (19%) 
    Fund Quality -- Rated as average (59%) 
    Portfolio Building -- Rated as average (41%) 
    Overall Rating: average (40%)

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). 

    For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:
    Fixed Income:( AGG or BND ) 
    Foreign Equity:( EFA or VEU ) 
    Emerging Market Equity:( EEM or VWO ) 
    US Equity:( SPY or VTI ) 

    Performance chart (as of Oct 15, 2010)

     
     
    Performance table (as of Oct 15, 2010)

    Portfolio Name
    1Yr AR
    1Yr Sharpe
    3Yr AR
    3Yr Sharpe
    5Yr AR
    5Yr Sharpe
    2%
    17%
    6%
    44%
    14%
    88%
    1%
    10%
    5%
    38%
    12%
    88%
    10%
    71%
    1%
    2%
    9%
    40%
    10%
    76%
    1%
    4%
    8%
    37%


    The Schwab Funds perform adequately against the SIB’s.
     
    TD Ameritrade (Ticker: AMTD) are also newcomers to the ETF space offering 100+ commission free ETFs. The main restriction is that customers have to hold these ETFs for more than 30 days to make such trades ecommission free.

    This is an almost ideal platform for retirement investing with a 30 day redemption period. With a web based application to monitor all of the funds in the plan, it should be possible to put together a very solid portfolio and deliver excellent results.

    These funds provide exposure to 6 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , Commodity , Real estate. 

    The list of minor asset classes covered:
    COMMODITIES BROAD BASKET: GSG , DBC 
    Conservative Allocation: AOK 
    DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE 
    Emerging Markets Bond: PCY 
    EQUITY: VTI,VT 
    EUROPE STOCK: IEV , VGK , PEF , DEB 
    Foreign Large Blend: EFA , VEU , GWL , PFA 
    Foreign Large Growth: EFG 
    Foreign Large Value: EFV , PID , DWM 
    FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC 
    Foreign Small/Mid Value: SCZ 
    Global Real Estate: IFGL , RWX 
    High Yield Bond: HYG , JNK , PHB 
    Inflation-Protected Bond: TIP 
    Intermediate Government: IEI , VGIT , ITE 
    Intermediate-Term Bond: AGG,CIU , BIV,BND 
    JAPAN STOCK: EWJ , JPP , PJO , DXJ 
    LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX 
    LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG 
    LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV 
    Latin America Stock: ILF , GML 
    LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW 
    Long-Term Bond: CLY,LQD , BLV,VCLT 
    MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV 
    Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW 
    MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU 
    Moderate Allocation: AOM 
    Multisector Bond: AGG,GBF , BND , LAG 
    Muni National Interm: ITM 
    Muni National Long: MUB , TFI , PZA , MLN 
    Muni National Short: SUB , SHM , PVI , SMB 
    PACIFIC/ASIA EX-JAPAN STK: EPP,AAXJ , GMF , PAF , DND 
    REAL ESTATE: IYR,ICF , VNQ 
    SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY 
    Short-Term Bond: CSJ , BSV,VCSH 
    SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA 
    Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK 
    SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT 
    SPECIALTY-REAL ESTATE: RWR , PSR , URE 
    World Allocation: AOR , AOA 
    WORLD BOND: IGOV , BWX,WIP 
    WORLD STOCK: IOO , VT
     
    As of Oct 15, 2010, this plan 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:

    Diversification     -- Rated as great (97%) 
    Fund Quality -- Rated as below average (28%) 
    Portfolio Building -- Rated as great (90%) 
    Overall Rating: above average (73%)

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). 

    For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    REITs:( IYR or VNQ or ICF ) 
    Fixed Income:( AGG or BND ) 
    Commodity:(DBC) 
    Foreign Equity:( EFA or VEU ) 
    Emerging Market Equity:( EEM or VWO ) 
    US Equity:( SPY or VTI ) 

    Performance chart (as of Oct 15, 2010)
     



    Performance table (as of Oct 15, 2010)

    Portfolio Name
    1Yr AR
    1Yr Sharpe
    3Yr AR
    3Yr Sharpe
    5Yr AR
    5Yr Sharpe
    13%
    87%
    13%
    86%
    20%
    128%
    10%
    83%
    -1%
    -6%
    9%
    46%
    10%
    65%
    9%
    66%
    17%
    114%
    11%
    84%
    2%
    9%
    9%
    42%


    Currently, asset classes in REITs( IYR , VNQ , ICF ) , Fixed Income( AGG , BND ) and Emerging Market Equity( EEM , VWO ) are doing relatively well. These asset classes are available to TD Ameritrade Commission Free ETFs participants.

     
    Portfolio Performance Comparison

    Portfolio Name
    1Yr AR
    1Yr Sharpe
    3Yr AR
    3Yr Sharpe
    5Yr AR
    5Yr Sharpe
    13%
    87%
    13%
    86%
    20%
    128%
    1%
    10%
    5%
    38%
    12%
    88%
    10%
    83%
    -1%
    -6%
    9%
    46%
    10%
    71%
    1%
    2%
    9%
    40%

     
     
    In this round, TD Ameritrade is the clear winner with tactical asset allocation while the Schwab SAA pretty much matches its counterpart.

    TD Ameritrade's two key advantages are:
    • A large number of ETF’s in six asset classes to allow the construction of high performance portfolios
    • Providing ETF’s with history from industry leading suppliers
     TD Ameritrade is the clear winner and moves on to the final round.

     

    labels:investment,

    Symbols:SUB,SHM,PVI,SMB,EPP,AAXJ,GMF,PAF,DND,SHY,SHV,VGSH,PLK,USY,CSJ,BSV,VCSH,AOR,AOA,IGOV,BWX,WIP,IOO,VT,RWR,PSR,URE,IJS,IWN,JKL,VBR,DSV,PWY,RZV,UVT,IJT,IWO,JKK,VBK,DSG,PWT,RZG,UKK,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,ITM,MUB,TFI,PZA,MLN,AGG,GBF,BND,LAG,IJJ,ETFs,Portfolio,Building,Asset,Allocation,Commission,Free,

     

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  • Capital Accumulation Plan of The Chubb Corporation Report On 12/03/2010

    12/03/2010

    This report reviews Capital Accumulation Plan of The Chubb Corporation plan. We will discuss the investment choices and present the plan rating by MyPlanIQ. Current economic and market conditions are discussed in the context of the investment portfolios in the plan. We will then show how participants in Capital Accumulation Plan of The Chubb Corporation can achieve reasonable investment results using asset allocation strategies.

    Plan Review and Rating

    Chubb Corp (Ticker:CB) has the "Capital Accumulation Plan of The Chubb Corporation".

    Capital Accumulation Plan of The Chubb Corporation's 401K plan consists of 24 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income. The list of minor asset classes covered:

    Diversified Pacific/asia: EPP, VPL, GMF, PAF
    Foreign Large Growth: EFG
    High Yield Bond: HYG, JNK, PHB
    Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
    Large Growth: IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG
    Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV
    Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
    Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
    Moderate Allocation: AOM
    Retirement Income:
    Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
    Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
    Target Date 2000-2010: TZD
    Target Date 2011-2015: TZE
    Target Date 2016-2020: TZG
    Target Date 2021-2025: TZI
    Target Date 2026-2030: TZL
    Target Date 2031-2035: TZO
    Target Date 2041-2045:
    Target Date 2050+:
    World Bond: IGOV, BWX, WIP

    As of Dec 2, 2010, this plan investment choice is rated as based on MyPlanIQ Plan Rating methodology that measures the effectiveness of a plan's available investment funds. It has the following detailed ratings:

    Diversification -- Rated as (30%)
    Fund Quality -- Rated as (9%)
    Portfolio Building -- Rated as (54%)
    Overall Rating: (33%)

    Current Economic and Market Conditions

    We have experienced an uncertain 2010: plenty of worries on whether the US economy will climb out of the great recession and recover.

    • The Federal Reserve embarked on Quantitative Easing II (QE2) to stimulate the economy.
    • The housing market is still at its low but largely stabilized.
    • The unemployment rate is stuck at 9%.

    Americans continue to face an uncertain future, given (among others) the high unemployment rate, large federal and local government debts and global trade imbalance. With such an economic backdrop, the stock and debt markets are going to be volatile. Despite this, markets have been resilient and appear positioned to rebound.

    In this market it is even more critical to properly diversify and respond market changes. MyPlanIQ offers two asset allocation strategies: strategic and tactical asset allocation strategies ( SAA and TAA for participants in Capital Accumulation Plan of The Chubb Corporation).

    Strategic Asset Allocation is based on well known modern portfolio theory and its key features include: diversification, proper fund selection and periodically re-balancing.

    Tactical Asset Allocation works on a diversified array of assets provided by funds in a plan and adjusts asset mixes based on market conditions such as asset price momentum utilized by TAA.

    Portfolio Discussions

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical 4 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    US Equity: (SPY or VTI)
    Foreign Equity: (EFA or VEU)
    Emerging Market Equity: (EEM or VWO)
    Fixed Income: (AGG or BND)

    Performance chart (as of Dec 2, 2010)

    Performance table (as of Dec 2, 2010)

    Currently, asset classes in US Equity (SPY,VTI) and Emerging Market Equity (EEM,VWO) are doing relatively well. These asset classes are available to Capital Accumulation Plan of The Chubb Corporation participants.

    To summarize, Capital Accumulation Plan of The Chubb Corporation plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Symbols: CB , SPY , VTI , EFA , VEU , EEM , VWO , AGG , BND , HYG , JNK , PHB , AOM , EFG , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , TZD , TZE , TZG , TZI , TZO , TZL , IGOV , BWX , WIP , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJJ , IWS , JKI , VOE , EMV , PWP , RFV , UVU , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , EPP , VPL , GMF , PAF

  • TD Ameritrade Commission Free ETFs Report On 12/07/2010

    12/07/2010

  • Sprint Nextel 401K Plan Report On 03/21/2011

    03/21/2011

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