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Articles on ICF

  • Top Tier ETF Broker Playoffs II

    10/26/2010

    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. We have completed the first analysis of TD Ameritrade and Schwab, we now proceed to examine Vanguard and Fidelity – two long term ETF providers.
     
    Vanguard is one of the largest index fund and ETF providers offering commission-free trading to its brokerage clients that use its lineups of 62 proprietary ETFs. Commission free ETF's are also offered by Fidelity and Schwab but Vanguard has the highest number of proprietary funds available.

    These funds enable participants to gain exposure to 5 major assets: Us Equity , Foreign Equity , Emerging Market Equity , Reits , Fixed Income .

    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 
    High Yield Bond: HYG , JNK , PHB 
    Industrials: IYJ , EXI , VIS 
    Intermediate Government: IEI , VGIT , ITE 
    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 22, 2010, this plan investment choice is rated as 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 average (57%) 
    Fund Quality -- Rated as average (60%) 
    Portfolio Building -- Rated as average (39%) 
    Overall Rating: average (50%)

    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 5 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 ) 
    Reits:( IYR or VNQ or ICF ) 
    Fixed Income:( AGG or BND ) 

    Performance chart (as of Oct 22, 2010)
    Performance table (as of Oct 22, 2010)

    Portfolio Name
    1Yr AR
    1Yr Sharpe
    3Yr AR
    3Yr Sharpe
    5Yr AR
    5Yr Sharpe
    13%
    83%
    6%
    35%
    13%
    81%
    15%
    116%
    2%
    6%
    8%
    42%
    11%
    72%
    7%
    54%
    15%
    105%
    14%
    103%
    3%
    13%
    9%
    41%


    Currently, asset classes in Emerging Market Equity( EEM , VWO ) , Reits( IYR , VNQ , ICF ) and Fixed Income( AGG , BND ) are doing relatively well. These asset classes are available to Vanguard 62 participants.

     
    Fidelity now makes trading 25 iShares ETFs for free. These ETFs cover complete US equity sizes and styles (large/mid/small caps and growth/blend/value styles). It covers international equity markets well too. In additon, it has good fixed income ETFs. The missing major asset classes are REITs and commodities. We hope those will be made free too. A plan called Fidelity Commission Efficient ETFs extends this plan by including several addtional ETFs (which cost $7.95 flat commission per trade).
    Fidelity 25 Commission Free ETFs's 401K plan consists of 25 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 Emerging Mkts: EEM , GMM , PXH , DEM , SCHE 
    Emerging Markets Bond: PCY 
    Foreign Large Blend: EFA , VEU , GWL , PFA 
    Foreign Small/mid Value: SCZ 
    Inflation-protected Bond: TIP 
    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-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 
    Muni National Long: MUB , TFI , PZA , MLN 
    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 
    World Stock: IOO , VT

    As of Oct 22, 2010, this plan investment choice is rated as 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 average (63%) 
    Fund Quality -- Rated as poor (9%) 
    Portfolio Building -- Rated as below average (14%) 
    Overall Rating: below average (27%)

    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 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 Oct 22, 2010)
     

    Performance table (as of Oct 22, 2010)

    Portfolio Name
    1Yr AR
    1Yr Sharpe
    3Yr AR
    3Yr Sharpe
    5Yr AR
    5Yr Sharpe
    3%
    24%
    3%
    19%
    11%
    71%
    10%
    68%
    -0%
    -3%
    7%
    28%
    2%
    14%
    6%
    47%
    14%
    90%
    10%
    75%
    2%
    5%
    8%
    37%


    Currently, asset classes in Foreign Equity( EFA , VEU ) , Emerging Market Equity( EEM , VWO ) and Fixed Income( AGG , BND ) are doing relatively well. These asset classes are available to Fidelity 25 Commission Free ETFs participants.

    To summarize:
    • Vanguard 62 Commission Free ETFs plan participants have seen returns in the 8-13% range for a moderate portfolio with strategic and tactical asset allocation based on having a five asset class portfolio.
    • Fidelity 25 Commission Free ETFs plan participants have seen returns in the 7-11% range for a moderate portfolio with strategic and tactical asset allocation based on having a five asset class portfolio.
    Given the greater number and greater diversification, the Vanguard plan would be the one most likely to continue to deliver better risk adjusted returns and so is declared the winner and moves on to the final round

    labels:investment,

    Symbols:AGG,BIV,BLV,BND,BSV,CIU,CLY,CSJ,DBE,DBN,DBR,DBT,DBU,DEB,DEM,DES,DGG,DKA,DLN,DON,DPN,DRF,DSC,DSG,DSV,EDV,EEM,EFA,ELG,ELV,EMG,EMM,EMV,EPP,EXI,EZM,GII,GMF,GMM,GWL,HYG,ICF,IEF,IEI,IEV,IFSM,IGE,IJH,IJJ,IJK,IJR,IJS,IJT,IOO,IPF,IPW,ITE,IVE,IVV,IVW,IWM,IWN,IWO,IW,


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  • Ford Motor Company 401K Plan: Diversified and High Quality

    10/24/2010

    In this article, we will discuss Ford Motor 401K 

     

    Ford Motor Company (Ticker: F) designs, develops, manufactures, and services cars and trucks worldwide. It operates in two sectors, Automotive and Financial Services. Ford Motor Company was founded in 1903 and is based in Dearborn, Michigan. Ford is one of the pioneers in automobile industry.

    Ford Motor 401K's 401K plan consists of 24 funds. These funds enable participants to gain exposure to 4 major assets: Us Equity , Foreign Equity ,REITs, Fixed Income . The list of minor asset classes covered:

    Foreign Large Blend: EFA , VEU , GWL , PFA
    Foreign Small/mid Growth: IFSM , VSS , SCHC
    Global Real Estate: IFGL , RWX
    Inflation-protected Bond: TIP
    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
    Mid-cap Blend: IJH , IWR , JKG , VO , MDY , EMM , PJG , DON , EZM , MVV
    Retirement Income:
    Small Blend: IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA
    Target Date 2016-2020: TZG
    Target Date 2026-2030: TZL
    Target Date 2036-2040: TZV
    Target Date 2050+:
    World Stock: IOO , VT

    As of Oct 22, 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 above average (76%)
    Fund Quality -- Rated as above average (69%)
    Portfolio Building -- Rated as above average (71%)
    Overall Rating: above average (72%)

    The Fund Quality ranking is very reasonable. Its selection includes Fidelity Contrafund, Neuberger Berman Genesis Instl and Royce funds. 

    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 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 )
    Reits:( IYR or VNQ or ICF )
    Fixed Income:( AGG or BND )

    Performance chart (as of Oct 22, 2010)

    Performance table (as of Oct 22, 2010)

    Currently, asset classes in Us Equity( SPY , VTI ) , Foreign Equity( EFA , VEU ) , REITs ( IYR , VNQ , ICF ) and Fixed Income( AGG , BND ) are doing relatively well. These asset classes are available to Ford Motor 401K participants.

    To summarize, Ford Motor 401K plan provides above average choices to its plan participants. As one of the major automobile manufacturers, Ford employees can benefit from such a plan to support their retirement needs.

     

    labels:investment,

    Symbols:F,SPY,VTI,EFA,VEU,IYR,VNQ,ICF,AGG,BND,CIU,BIV,GWL,PFA,IFGL,RWX,TZG,TZL,TZV,IVV,IYY,IWV,VV,DLN,RSP,SCHX,IOO,VT,IVW,IWZ,JKE,VUG,ELG,QQQQ,RPG,SCHG,IJH,IWR,JKG,VO,MDY,EMM,PJG,DON,EZM,MVV,IFSM,VSS,SCHC,IJR,IWM,JKJ,VB,DSC,PJM,DES,SAA,UWM,SCHA,TIP,ETF,Portfolio,Building,401K,

     

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  • Lazy Portfolios -- The Playoffs II

    10/19/2010

    This is the second article as we attempt to whittle down the lazy portfolios to four finalists for great analysis of what makes for a great portfolio. We are in the bottom half of the alphabetical list and the eight are listed in reducing order asset classes and funds. We have stated that the winners should be those with the most asset classes and highest number of funds.

    Portfolio Classes Funds ETF Equivalent
    Seven-12  7  12 Y
    SIX SIB SAA  6  6 y
    Gone Fishin'  5  10 y
    Swensen 6  4  6 Y
    Wasik`s Nano  4  5 Y
    Harry Browne  3  4 Y
    Schultheis  3  3
    Lowell  2  8 Y
    We are using this series of comparisons to validate whether this proves to be true.
    • Craig L. Israelsen, Ph.D., is an Associate Professor at Brigham Young University. The Seven Equally Weighted, twelve fund portfolio is aimed to protect against losses.
    • The MyPlanIQ six asset SIB has index funds for each of the asset classes represented and rebalances monthly – this is primarily a benchmark portfolio
    • Alexander Green proposed this The Gone Fishin' Portfolio which was outlined in his book 'The Gone Fishin' Portfolio'
    • David Swensen, the Yale Endowment Manager, proposed this one size fit in all model portfolio for individual investors.
    • John Wasik has been a professional journalist and author for 30 years specializing in personal finance. John proposed a portfolio which employs a handful of index or ETFs
    • Harry Browne is the author of Fail-Safe Investing
    • Bill Schulthe is is a former Smith Barney broker and author of "The Coffeehouse Investor."
    • Jim Lowell edits MarketWatch's ETF Trader, an investment letter employing a momentum-based exchange-traded-fund strategy for long-term investors.

    The returns are now presented in order of highest to lowest of the five year returns. How do the returns compare to what we would have expected?

    Portfolio/AR(%) 1 Yr 3 Yr 5 Yr Inception
    Harry Browne                 12.49                   7.40                   8.99                   7.31
    Six SIB SAA                 12.54                   1.61                   7.44                   8.26
    Seven-12                 15.55                   0.80                   6.41                   6.16
    Swensen Six                 15.10                 (0.24)                   6.21                   7.10
    Gone Fishin'                 12.98                 (0.34)                   5.64                   6.72
    Wasik`s Nano                 15.34                 (1.93)                   4.74                   4.66
    Schultheis                   9.23                 (2.28)                   4.68                   4.59
    Lowell                 12.45                 (6.26)                   3.55                   6.74
    • The portfolios roughly follow the asset class/fund class as would be expected
    • The Harry Browne portfolio stands out as the clear exception to the rule – it has a signnificant lead over the other portfolios
    • The six asset SIB performed well – that was expected. Six asset classes with index funds should perform well
     
    When we look at the drawdown for each of the portfolios, it will reveal which is the most painful to own.  
         
    Portfolio/DD
    1 Yr
    3 Yr
    5 Yr
    Inception
    Harry Browne
    5%
    15%
    15%
    15%
    Swensen Six
    8%
    39%
    39%
    39%
    Six SIB SAA
    8%
    39%
    39%
    39%
    Schultheis
    9%
    39%
    39%
    39%
    Seven-12
    8%
    40%
    40%
    40%
    Gone Fishin'
    9%
    42%
    42%
    42%
    Wasik`s Nano
    9%
    44%
    44%
    44%
    Lowell
    16%
    57%
    57%
    57%

    Again the Harry Browne portfolio is the clear winner.

    We  select the top two – which are the Harry Browne and Six asset SIB to move to the final round where they will be put against the best two funds from the top half of the alphabet.

    Takeaways
    • The portfolios followed the expected path against asset classes and funds
    • The Harry Browne portfolio was the clear winner and was the exception – we will find out in the final article whether it proves the rule
    • With the exception of the Harry Browne portfolio, the drawdown ratios are uncomfortably high
    • ETF’s can be used to implement any of these strategies

     

    labels:investment,

    Symbols:ACWI,ACWX,ADRE,AGG,BIV,BLV,BND,BSV,BWX,CFT,CIU,CSJ,DBC,DBV,DIA,DVY,EDV,EEM,EFA,EFG,EFV,EMB,ETF,GLD,GOOG,GSG,GXC,HPQ,HYG,ICF,IEF,IEI,IFGL,IGOV,IGR,IJH,IJJ,IJK,IJR,IJS,IJT,IVE,IVV,IVW,IWB,IWC,IWD,IWF,IWM,IWN,Portfolio-Building,with,ETFs,Closed-End,Funds,Commodity,ETFs,Currency,ETFs,Developed,Market,ETFs,

     

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  • Lazy Portfolios -- The Playoffs

    10/19/2010

    We have compared the performance of  fifteen buy and hold portfolios from investing luminaries. Each of the portfolios was measured for performance against SIBs and their relative merits examined. We now move into a playoff round where we will compare the portfolios with each other and see if we can find an eventual winner and look at why they won and what we can learn from this.
     
    When we were testing the portfolios against SIBs, we introduced a tactical asset allocation strategy which usually turned out to have the best performance. For this series of peer comparisons, we are only going to use a buy and hold strategy. When we find the eventual winner, we will then perform a final comparison with tactical asset allocation and see what we conclude.

    The portfolios have been sorted alphabetically and we are going to start with the top part of the alphabet. The portfolios will be listed by decreasing number of asset classes and decreasing number of funds. We would expect that the portfolio with the greatest number of asset classes to have the highest returns and we will test that to see to what extent it is true.

    Table of Lazy Portfolios and their classes and funds

     

    Portfolio Classes Funds ETF Equivalent
    Fund Advice                         5                       11 Y
    Gibson                         5                         6 y
    Five SIB SAA                         5                         5 Y
    Aronson                         4                       11 y
    Armstrong                         4                         7 y
    Four SIB SAA                         4                         4 Y
    Burns/Tobias                         3                         3 Y

     

    • Paul Merriman's FundAdvice.com website has indexed porfolios for several fund companies. The basic strategy is the same as with all the other Lazy Portfolios, here with 11 no-load index funds
    • Gibson's 5 Equal Asset Allocation Strategy comes from Roger Gibson’s widely read "Asset Allocation: Balancing Financial Risks.”
    • The MyPlanIQ five asset SIB has index funds for each of the asset classes represented and rebalances monthly – this is primarily a benchmark portfolio
    • Ted Aronson and his AJO Partners manage about $25 billion of institutional assets. Aronson puts his family's taxable money in this well-diversified portfolio of no-load index funds
    • Frank Armstrong, author of The Informed Investor, proposed his portfolio for an MSN Money article
    • The MyPlanIQ four asset SIB has index funds for each of the asset classes represented and rebalances monthly – this is primarily a benchmark portfolio
    • Scott Burns has covered personal finance and investments for nearly 40 years and ranks as one of the most widely read personal finance writers in the country/ Andrew Tobias, a Harvard alum and writer of 12 books including The Only Investment Guide You'll Ever Need.


    Table of Lazy Portfolios and their Annual Returns

    Portfolio/AR(%) 1 Yr 3 Yr 5 Yr Inception
    Five SIB SAA                 14.27                   1.73                   7.67                   8.38
    Four SIB SAA                 10.76                   0.17                   7.11                   7.40
    Fund Advice                 10.85                   0.24                   6.06                   6.75
    Armstrong                 11.69                 (1.76)                   5.15                   5.55
    Burns/Tobias                   0.45                 (2.32)                   4.54                   4.48
    Aronson                   8.46                 (1.10)                   3.48                   3.59
    Gibson                   8.63                 (4.72)                   0.08                   3.43


    The returns are now presented in order of highest to lowest of the five year returns. How do the returns compare to what we would have expected.
    • There was a wider spread than expected on the four and five asset class portfolios and the Burns/Tobias three asset class, three fund portfolio performed better than expected
    • A five asset class portfolio came out on top – that was expected. The fact that an index based portfolio won out it also not surprising as index funds often outperform funds with active management
    • The fact that a four asset portfolio beat a five asset portfolio demonstrates that picking the right funds in an asset class is important and that index funds deliver good results
    • For a very simple three asset portfolio, the Burns/Tobias performance came higher in the league table
    • The most surprising result is that the Gibson portfolio performed so poorly. When breaking down the long term results of this portfolio, the selection of asset classes has given the portfolio a modest return with a low drawdown index. In the significant market downturn over the past few years, it suffered (as did most buy and hold strategies) badly and has returned to its modest gains whereas other portfolios have had a higher drawdown ratio but a faster recovery


    Table of Lazy Portfolios and their Draw Down Ratios

    Portfolio/DD 1 Yr 3 Yr 5 Yr Inception
    Aronson 6% 30% 30% 30%
    Fund Advice 9% 38% 38% 38%
    Gibson 7% 38% 38% 38%
    Four SIB SAA 9% 40% 40% 40%
    Five SIB SAA 8% 41% 41% 41%
    Scott Burns 9% 41% 41% 41%
    Armstrong 11% 44% 44% 44%
    We list the draw down ratios for each of the portfolios and it’s clear that with the recent turbulence, all of them are higher than would be desired.
    We will select the top two – which are the four and five asset SIBs to move to the final round where they will be put against the best two funds from the bottom half of the alphabet.

    Takeaways
    • Asset classes and number of funds in each class are an indicator of better returns but it’s not the only thing
    • Index funds continue to show good results against managed funds
    • or those investing in the very long term, looking at the draw down index is important because it will help you live with the fund selection you have made
    • ETF’s can be used to implement any of these strategies

     

    labels:investment,

    Symbols:ACWI,ACWX,ADRE,AGG,BIV,BLV,BND,BSV,BWX,CFT,CIU,CSJ,DBC,DBV,DIA,DVY,EDV,EEM,EFA,EFG,EFV,EMB,ETF,GLD,GOOG,GSG,GXC,HPQ,HYG,ICF,IEF,IEI,IFGL,IGOV,IGR,IJH,IJJ,IJK,IJR,IJS,IJT,IVE,IVV,IVW,IWB,IWC,IWD,IWF,IWM,IWN,Portfolio-Building,with,ETFs,Closed-End,Funds,Commodity,ETFs,Currency,ETFs,Developed,Market,ETFs,

     

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  • Case Study: Hewlett Packard's 401K Plan

    10/09/2010

    Retirement investing is an integral part of American personal finance. With $8.9 trillion parked in over 800 thousand retirement plans [401K], millions of Americans will increasingly rely on their 401K accounts to fund their future retirement needs. This article is part of a series of case studies we are conducting for various 401K plans. In this article, we will discuss how participants in Hewlett Packard's 401K plan can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today’s market environment.

    Hewlett Packard (HP) (NYSE: HPQ) is one of the largest IT companies. Founded by Bill Hewlett and Dave Packard in Palo Alto, California, HP was the earliest technology company that eventually led to the formation of Silicon Valley. Today Hewlett-Packard has over 300 thousands employees world wide.

    HP is known to be employee friendly. It has been named several times as one of the best companies to work for. Its 401k plan provides a well diversified array of high quality funds.

    Hewlett Packard's 401K plan consists of 29 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Emerging Market Equity, REITs and Fixed Income. The the list of minor asset classes covered:

    Large Blend: SPY, VTI
    Large Value: IWD, VTV
    Large Growth: IWF, VUG
    Mid-Cap Blend: MDY, IWR
    Foreign Large Blend: EFA
    Foreign Large Growth: EFG
    Foreign Large Value: EFV
    Foreign Small/Mid Growth: SCZ
    Diversified Emerging Mkts: EEM, VWO
    Real Estate: IYR, ICF, VNQ
    World Bond: BWX
    Emerging Markets Bond: PCY, EMB
    Inflation-Protected Bond: TIP
    Intermediate-Term Bond: AGG, BND
    Long Government: IEF, TLT
    UltraShort Bond: BSV
    Muni National Long: MUB
    High Yield Bond: HYG, JNK

    As of 9/13/2010, 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 (score: 89%)

    Fund Quality – Rated as above average (score: 76%)

    Portfolio Building -- Rated as above average (score: 72%)

    Overall Rating: above average (score: 78%)

    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:

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

    Performance chart (as of 9/13/2010)

    Performance table (as of 9/13/2010)

    1 Yr AR (%) 1 Yr Sharpe (%) 3 Yr AR (%) 3 Yr Sharpe(%) 5 Yr AR (%) 5 YR Sharpe (%)
    Plan SAA 15.95 145.83 2.34 10.27 5.76 29.43
    5 SIB SAA 13.09 96.52 2.49 8.77 6.74 29.02
    Plan TAA 15.53 103.28 9.35 73.75 11.43 88.56
    5 SIB TAA 9.99 68.82 8.11 66.77 11.62 92.08

    Currently, asset classes in emerging market stocks (EEM, VWO), REITs (Real Estate Investment Trusts) (VNQ, IYR, ICF) and fixed income (AGG, BND) are doing relatively well. These asset classes are available to HP 401k participants.

    To summarize, Hewlett Packard 401K 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 emerging market stocks, REITs and fixed income funds.

     

    labels:investment,

    Symbols:BND,BSV,BWX,EFA,EFG,EFV,EMB,HPQ,HYG,ICF,IEF,IWD,IWF,IWR,IYR,JNK,MDY,MUB,PCY,PHB,SCZ,SPY,TLT,VEU,VNQ,VTI,VTV,VUG,Fixed,Income,Asset,Allocation,Bonds,Dollar/Currencies,Earnings,


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  • Apartment Investment and Management Company 401(k) Retirement Plan Report On 12/03/2010

    12/03/2010

    This report reviews Apartment Investment and Management Company 401(k) Retirement Plan 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 Apartment Investment and Management Company 401(k) Retirement Plan can achieve reasonable investment results using asset allocation strategies.

    Plan Review and Rating

    Apartment Investment and Management Company 401(k) Retirement Plan's 401K plan consists of 22 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, REITs, Fixed Income. The list of minor asset classes covered:

    Foreign Large Growth: EFG
    Inflation-protected Bond: TIP
    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
    Mid-cap Blend: IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV
    Real Estate: IYR, ICF, VNQ
    Retirement Income:
    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
    Target Date 2000-2010: TZD
    Target Date 2016-2020: TZG
    Target Date 2026-2030: TZL
    Target Date 2036-2040: TZV
    Target Date 2050+:

    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 (76%)
    Fund Quality -- Rated as (36%)
    Portfolio Building -- Rated as (87%)
    Overall Rating: (68%)

    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 Apartment Investment and Management Company 401(k) Retirement Plan).

    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)
    REITs: (IYR or VNQ or ICF)
    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), Foreign Equity (EFA,VEU) and REITs (IYR,VNQ,ICF) are doing relatively well. These asset classes are available to Apartment Investment and Management Company 401(k) Retirement Plan participants.

    To summarize, Apartment Investment and Management Company 401(k) Retirement Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Symbols: AIV , SPY , VTI , EFA , VEU , IYR , VNQ , ICF , AGG , BND , CIU , BIV , EFG , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , TZD , TZG , TZL , TZV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJH , IWR , JKG , VO , MDY , EMM , PJG , DON , EZM , MVV , IJS , IWN , JKL , VBR , DSV , PWY , RZV , UVT , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , TIP

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