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Articles on AGG

  • Investment Management: Morgan Stanley Smith Barney Is Now on Risk Off Mode

    11/15/2011

    Morgan Stanley Smith Barney published its latest November viewpoints on portfolio strategies. It stated that the odds of a recession in the U.S. and beyond are “uncomfortably high.”  Here are its tactical changes for portfolios:

     

     

    The global cash represents dollars and other currencies. This itself should be treated as an asset class that needs careful management.

    Compared with MyPlanIQ's Tactical Asset Allocation(TAA), we are cautious and about 1/3 to 1/2 of full risk asset exposure. Some of our plans reduced risk asset exposures in September, helping to even preserve some gains from risk assets.

    See Six Core Asset ETFs that consists of six major asset classes US Stocks (SPY, VTI), International Stocks (EFA, VEU), Emerging Market Stocks (EEM, VWO), REITs (IYR, VNQ), Commodities (DBC, GSG) and Total US Bonds (AGG, BND).

    Portfolio Performance Comparison (as of 11/14/2011)

    Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    Six Core Asset ETFs Strategic Asset Allocation Moderate 3% 12% 13% 73% 5% 25%
    Six Core Asset ETFs Tactical Asset Allocation Moderate -0% -15% 8% 65% 9% 67%
    SPY 6% 4% 13% 23% -0% -9%
    VBINX 6% 14% 13% 46% 3% 10%

    More details here.

    Symbols: SPX, COMP, SPY, VTI, EFA, EEM, VWO, VNQ, IYR, DBC, AGG, Investment Management, Asset Allocation

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  • 7 Ways To Keep Calm In a Stormy Market -- How

    11/10/2011

    We would like to comment on an article written by MICHAEL A. POLLOCK www.smartmoney.com. In it, he outlined the following 7 ways:

    1. Get real about your tolerance for pain. --- in our words, risk profile, risk profile!
    2. Favor funds that cast a wider net. --- in our words, diversification
    3. Hire a pilot who charts a smoother ride. --- in our words, go anywhere
    4. Don't try to wager on where stocks are headed. --- in our words, do not wager all in and all out
    5. Fine-tune your cash stash to your family's needs. --- in our words, cash is king, not even money market funds, that can have exposure in some you-never-know-what-happen-under-the-matt stuff (read, Greek, Italian bonds)
    6. Don't assume that a stock-free portfolio is risk-free. --- in our words, nothing is risk-free, even cash. 
    7.  Don't be ashamed to seek help. -- in our words, follow a sound and systemic advice, being humans or systems. 

    Read the original article here

    Or Check out MyPlanIQ's Six Core Asset ETFs  or many other plans including asset allocation portfolios for many 401K plans.

    Symbols:  SPX,  COMP,  SPY,  EFA,  EEM,  IYR,  VTI,  DBC,  VNQ,  VWO, AGG,  BND,  Retirement Investments,  Asset Allocation

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  • Strategic and Tactical Allocation for Retirement Investments

    10/17/2011

    Strategic Asset Allocation(SAA) and Tactical Asset Allocation(TAA) can complement to each other. The following is a recent article Core Satellite Portfolios For Long-Term Investments published on SeekingAlpha.com that discussed this issue:

    "Recent market swings and weakness have proven to be difficult for both strategic and tactical asset allocation strategies. For a long-term investor who is concerned about his/her retirement investments, such as 401(k)s, IRAs, 403(b)s and variable annuity accounts, it is thus important to understand the strength and weaknes of the two common strategies.

    The concept of core satellite portfolio construction has been adopted for several years by many investment advisers, wealth managers and financial planners. The EDHEC has collected several papers detailing this concept."

    ......

    Read more on Core Satellite Portfolios For Long-Term Investments. 

    See the Core Satellite Six Core Asset ETFs 25 Core 75 Satellite portfolio and the comparison with strategic asset allocation and tactical asset allocation.

    Symbols: SPX, COMP, AGG, BND, DBC, EEM, EFA, GSG, IYR, SPY, VEU, VNQ, VTI, VWO, Retirement Investments, Portfolio Management, Asset Allocation

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  • Don’t Fumble Your Retirement Planning

    10/17/2011

    September 29, 2011 by Lauren Tivnan on Portfolioist.com

    Guest blog by Lauren Tivnan, Managing Editor, Portfolioist.com.

    More and more participants in 401(k) plans are using Target Date Funds according to the nonpartisan Employee Benefit Research Institute (ERBI). Here at the Portfolioist, we think this is great news. For more than a year now, we’ve been writing about the benefits of Target Date Funds (and more specifically, our line-up of Target Date Folios) along with a variety of postings on the importance of planning and saving for retirement.

    The ERBI study found that… the percentage of all 401(k) plan participants using Target Date Funds increased from 25% in 2007 to 31% in 2008 and to 33% in 2009. ERBI also found that participants who allocate 100% of their account balance to Target Date Funds (which are often a default investment options in many 401(k) plans) are likely to stay in them:

    • Among only those participants who had all of their account allocated to TDFs, a very high rate (83.0%) stayed at a 100% allocation in 2009.
    • Almost 13% of those who had a total allocation to TDFs in 2007 had an allocation lower than 100% (but not zero) allocation in 2009.
    • Only 4% of participants with a 100% TDF allocation in 2007 had stopped using them by 2009.
    • Participants who stayed in a 100% TDF allocation and were between the ages of 30-49were more likely to stick with an all-TDF investment than those younger or older.

    This is all good news. Employees need to save early and often for their retirement (something that has been preached to them over and over again in every financial planning magazine and by almost every financial planner) and we’re happy to see that Target Date Fund usage is growing.

    Target Date Funds: Not a Hands-Off Retirement Tool

    But what really stood out to me in the results was the age range of employees who kept 100% of their allocations in Target Date Funds: the folks ages 30-49. Are they “setting and forgetting” about their retirement savings?

    Now the ages of 30-49 represent one of the busiest times of a worker’s life. Let’s make some general assumptions here. At this point in their career, they’ve most likely had two or more positions (or even separate careers) are probably raising a few kids, and may also be supporting aging parents. Needless to say, there’s a lot on this demographics collective “plates” and I’m wondering if they are simply choosing Target Date Funds as a quick means to an end—one that they hope leads to a well-financed retirement (as opposed to actively managing their account).

    Retirement Calculations: Don’t Drop the Ball

    According to ERBI’s 2011 Retirement Confidence Survey, a majority of workers have not tried to calculate how much they will need for retirement, which means that many might just still be in the dark about how much they in fact need to save to live on in retirement.

    Here’s a few scary stats  from the survey’s findings:

    • Doing the Calculation: Less than half of workers (42%) report that they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortable in retirement.
    • Guessing: Many workers simply guess at how much they will need to accumulate. Forty-two percent of workers report they guessed at the amount they need to save, including 11% of those who report having done a calculation.

    Retirement Planning: Stay Off the Sidelines

    Don’t get me wrong, I’m happy to see that more and more employees are investing in Target Date Plans at work. That’s great news. Whether it’s because Target Date Funds are growing in popularity among plan sponsors, or whether employees are simply too busy with “life” to actively manage their retirement, still remains to be seen.

    A Target Date Fund is a great investment tool for retirement—but not one that investors should “set and forget.” Check in with it once and awhile. Make sure your allocations are still on target. Watch out for high plan fees (see, “How Much Does Your 401(k) Plan Really Cost You?”) and most importantly, do the calculations (we’ve recommended this free retirement calculator developed by T.Rowe Price in the past).

    Get involved in your retirement planning now and stay involved throughout your working years. I guarantee it’ll pay off.

    Symbols: SPX, COMP, SPY, EFA, EEM, IYR, AGG, Retirement Investments, 401K Investments

     

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  • Ameriprise Employees Filed A Suit Over Expensive 401K Plan Fund Choices

    10/13/2011

    Reuters recently reported the following:

    Analysis: Latest 401(k) lawsuit highlights ongoing fee concerns | Reuters

    (Reuters) - While workers can't do much when a stock market sell-off hits their 401(k) balances, they can speak up about poor investment choices and unreasonable plan fees. Now, more are taking those complaints to the courts as they bring lawsuits against employers they believe have allowed poorly-performing and overly-expensive funds into their retirement plans.

    "They put people into their products, and they were not vetted and were excessively expensive," Jerome Schlichter, who is representing the Ameriprise employees, told Reuters in an interview. He says the company was "self dealing."

    Based on MyPlanIQ's rating, Ameriprise Financial 401(k) Plan has an overall score 19% out 100%. Here are the more detailed analysis:

    Diversification -- Rated as average (44%)
    Fund Quality -- Rated as poor (3%)
    Portfolio Building -- Rated as below average (12%)
    Overall Rating: below average (19%)

    The 401K plan consists of 25 funds. These funds cover only 3 major assets: US Equity, Foreign Equity, Fixed Income.

    The actual fund lineups and their ratings:

    Asset Class Ticker Name Description Rating
    INTERNATIONAL EQUITY
    Foreign Large Blend AIZAX AllianceBernstein International A AllianceBernstein International 23%
    US EQUITY
    LARGE BLEND ALEIX RiverSource Disciplined Equity I RiverSource Disciplined Equity Fund 59%
    LARGE GROWTH VIGIX Vanguard Growth Index Instl Wellington Trust Large Cap Growth Portfolio 81%
    LARGE VALUE RSEDX RiverSource Diversified Equity Income R5 RiverSource Diversified Equity Income Fund 35%
    LARGE VALUE RSEYX RiverSource Equity Value R5 RiverSource Trust Equity Index Fund III 35%
    Mid-Cap Growth VMGIX Vanguard Mid-Cap Growth Index Inv Wellington Trust Mid Cap Growth Portfolio 57%
    MID-CAP VALUE RMCVX RiverSource Mid Cap Value R4 RiverSource Mid Cap Value Fund 36%
    MID-CAP VALUE RMCVX RiverSource Mid Cap Value R4 RiverSource Mid Cap Value Fund 36%
    Small Growth ALSRX Alger SmallCap Growth Institutional I Alger Small Cap Fund 67%
    SMALL VALUE JASCX James Small Cap James Small Cap Fund 77%
    US EQUITY AMP Ameriprise Financial Inc Ameriprise Financial, Inc. Common Shares  
    FIXED INCOME
    Intermediate Government VFIUX Vanguard Interm-Term Treasury Adm RiverSource Government Income Fund 59%
    Intermediate-Term Bond RDBIX RiverSource Diversified Bond I RiverSource Diversified Bond Fund 45%
    Other
    Moderate Allocation IDMYX RiverSource Balanced R4 RiverSource Balanced Fund 26%
    ROOT CASH CASH Evergreen Money Market Fund  
    ROOT CASH CASH RiverSource Trust Money Market Fund I  
    ROOT CASH CASH RiverSource Trust Stable Capital Fund I  
    Target Date 2000-2010 RSSPX RiverSource Retirement Plus 2010 Y RiverSource Retirement Plus 2010 11%
    Target Date 2011-2015 RSFNX RiverSource Retirement Plus 2015 Y RiverSource Retirement Plus 2015 26%
    Target Date 2016-2020 RSNFX RiverSource Retirement Plus 2020 Y RiverSource Retirement Plus 2020 11%
    Target Date 2021-2025 RSMEX RiverSource Retirement Plus 2025 Y RiverSource Retirement Plus 2025 7%
    Target Date 2026-2030 RPTYX RiverSource Retirement Plus 2030 Y RiverSource Retirement Plus 2030 14%
    Target Date 2031-2035 RPOYX RiverSource Retirement Plus 2035 Y RiverSource Retirement Plus 2035 22%
    Target Date 2036-2040 RPFYX RiverSource Retirement Plus 2040 Y RiverSource Retirement Plus 2040 21%
    Target Date 2041-2045 RRPYX RiverSource Retirement Plus 2045 Y RiverSource Retirement Plus 2045 30%

    From the above, one can see that RiverSource funds have very low ratings. These funds are expensive. For example, RiverSource Diversified Bond I (RDBIX) has 0.49% expense ratio, compared with Vanguard Total Bond Market Index Adm (VBTLX).

    Here is the performance between RDBIX and VBTLX:

    Portfolio Performance Comparison (as of 10/13/2011)

    Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    RDBIX 2% 54% 9% 164% 5% 79%
    VBTLX 3% 121% 8% 163% 6% 118%

     

    See RDBIX vs. VBTLX for more detailed comparison.

    Interested readers can compare other funds using MyPlanIQ comparison tool.

    The following are the model portfolio performance, compared with Simple Is Better (SIB) 3 Core Asset ETF portfolios.

    Performance chart (as of Oct 12, 2011)

    Performance table (as of Oct 12, 2011)

    So not only the plan provides minimum diversification (only three major asset US stocks, International Stocks and Bonds), it also has many low quality and expensive funds. No wonder the plan participants rebeled.

    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: AMP, SPX, COMP, SPY, VTI, EFA, AGG, 401K Investments, Portfolio Management

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  • Retirement Investments: Right Expectations at The Right Time

    09/23/2011

  • 3 Portfolio Management Techniques for 3 Bears in The Double-dip Recession

    09/15/2011

  • 401K Investments: Facebook 401K Plan Reviewed

    09/08/2011

  • 5 Assets for a Global Banking Crisis?

    08/17/2011

  • Does Timing Market Only Work for Pros?

    08/12/2011

  • 5 Steps to Take When Your Company's Pension Is Underfunded

    08/09/2011

  • Economic Indicators Signal Overvalued Stock Markets

    07/18/2011

  • Economic Indicators Signal Overvalued Stock Markets

    07/18/2011

  • Two Ways to Counter The Government's Financial Repression

    06/10/2011

  • How To Guard Against Another Financial Crisis Around The Corner?

    05/31/2011

  • BND Leads US Total Bond ETFs

    05/17/2011

  • Appetite for US High Yield Bonds Remains High as Yields Tighten

    05/11/2011

  • US Total Bonds Led By AGG, BND

    04/26/2011

  • Do stocks make sense in the long run?

    04/22/2011

  • US Total Bonds (BND): PowerShares CEF Income Composite shows good Performance

    04/20/2011

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