Top Plans for Brokerages
Vanguard ETF: 7.4%*
Diversified Core: 8.1%*
Six Core Asset ETFs: 7.3%*
*:5 Yr Annualized Return of TAA Moderate Portfolio

...More Plans...

Articles on DGG

  • Schwab Mutual Funds Beat out ETFs

    04/06/2011

    l

    Retirement investing is a "hair on fire" problem -- especially for baby boomers for whom retirement is a near and present danger. There is a real lack of consistent, unbiased information that a retiree can use to help improve risk adjusted returns. Blogger Jenny Hollingworth has been teaching herself about investing and has come to the point where she is going to choose a plan and make her first investments.

    In her recent post New Steps she sorted through a list of alternatives and chose the Schwab OneSource Select List Funds.

    The reason for her choice was:

    • The highest possible rating for each plan is 5 stars.  So I bypassed anything that didn’t have 5 (because really, why go for less?)
    • Picked out a name I knew: Schwab.  Specifically: Schwab OneSource Select List Funds. I selected it.  
    • This is an application to Charles Schwab's OneSource Select List mutual funds. These funds are  No Load and No Transaction Fee (NTF) mutual funds. Based on Schwab's policy, the no load NTF funds have 90 days redemption fee period. As of 1/1/2010, there are total  140 OneSource Select List funds available from Schwab.

    We are going to review the Schwab OneSource Select List Funds  to see whether she chose a good plan. The plan consists of 137 funds. These funds enable participants to gain exposure to 6 major assets: US Equity, Commodity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.

     

    Asset Class Ticker Name
    LARGE VALUE AAGPX American Beacon Lg Cap Value Inv
    Foreign Large Value AAIPX American Beacon Intl Equity Inv
    Retirement Income AANPX American Beacon Retire Inc & Apprec Inv
    High Yield Muni ABHYX American Century High-Yield Muni Inv
    Inflation-Protected Bond ACITX American Century Infl-Adj Bond Inv
    Muni National Long ACLVX American Century Long-Term Tax-Free Inv
    MID-CAP VALUE ACMVX American Century Mid Cap Value Inv
    Conservative Allocation AONIX American Century One Choice: Vry Cnsrv I
    MID-CAP VALUE ARDEX Aston/River Road Dividend All Cap Val N
    Target Date 2011-2015 ARFIX American Century LIVESTRONG 2015 Inv
    Retirement Income ARTOX American Century LIVESTRONG Inc Inv
    Target Date 2021-2025 ARWIX American Century LIVESTRONG 2025 Inv
    Target Date 2031-2035 ARYIX American Century LIVESTRONG 2035 Inv
    SMALL VALUE AVPAX American Beacon Small Cp Val Inv
    EUROPE STOCK AXEAX Threadneedle European Equity A
    Muni National Interm BMBSX Baird Intermediate Muni Bd Inv
    Technology BOGSX Black Oak Emerging Technology
    Small Growth BSCFX Baron Small Cap
    Moderate Allocation BUFBX Buffalo Balanced
    Technology BUFTX Buffalo Science & Technology
    DIVERSIFIED EMERGING MKTS CEMVX Causeway Emerging Markets Investor
    MID-CAP BLEND CHTTX Aston/Optimum Mid Cap N
    Intermediate Government CPTNX American Century Government Bond Inv
    Small Growth CSMVX Century Small Cap Select Inv
    REAL ESTATE CSRSX Cohen & Steers Realty Shares
    Long-Short CVSIX Calamos Market Neutral Income A
    SMALL BLEND DISSX Dreyfus Small Cap Stock Index
    Bank Loan EABLX Eaton Vance Floating Rate Adv
    Conservative Allocation EXDAX Manning & Napier Pro-Blend Cnsrv Term S
    Foreign Large Blend EXWAX Manning & Napier World Opportunities A
    Moderate Allocation FAGSX First American Strat Growth Allc A
    Financial FBRSX FBR Small Cap Financial
    ULTRASHORT BOND FEUGX Federated Adjustable Rate Secs Instl
    Intermediate Government FICMX Federated Income Instl
    Muni National Interm FIMTX Federated Intermediate Municipal Instl
    LARGE BLEND FMIHX FMI Large Cap
    Long-Short FMLSX Wasatch-1st Source Long/Short
    SHORT GOVERNMENT FSGVX Federated US Govt 1-3 Yr Instl
    Muni Short FSHIX Federated Shrt-Interm Dur Muni Instl
    Short-Term Bond FSTIX Federated Short-Term Income Instl
    Intermediate-Term Bond FTRFX Federated Total Return Bond Instl Svc
    SMALL BLEND GABSX Gabelli Small Cap Growth AAA
    Communications GABTX GAMCO Global Telecommunications AAA
    LARGE GROWTH HCAIX Harbor Capital Appreciation Inv
    Foreign Large Blend HIINX Harbor International Inv
    WORLD STOCK HLMGX Harding Loevner Global Equity Advisor
    Foreign Large Growth HLMNX Harding Loevner International Equity Inv
    Equity Energy ICENX ICON Energy S
    China Region ICHKX Guinness Atkinson China & Hong Kong
    LARGE VALUE INDZX RiverSource Diversified Equity Inc A
    Moderate Allocation JABAX Janus Balanced T
    Health JAGLX Janus Global Life Sciences T
    LARGE GROWTH JAMRX Janus Research T
    Small Growth JATTX Janus Triton T
    Foreign Large Blend JETAX Artio International Equity II A
    Target Date 2021-2025 JNSAX JPMorgan SmartRetirement 2025 A
    LARGE BLEND JRMSX INTECH Risk-Managed Core T
    Target Date 2011-2015 JSFAX JPMorgan SmartRetirement 2015 A
    Target Date 2026-2030 JSMAX JPMorgan SmartRetirement 2030 A
    Target Date 2016-2020 JTTAX JPMorgan SmartRetirement 2020 A
    LARGE BLEND JUEAX JPMorgan US Equity A
    LARGE VALUE JVLAX JHancock3 Disciplined Value A
    Small Growth KGSCX Kalmar Growth-with-Value Small Cap
    LARGE GROWTH LGILX Laudus Growth Investors US Large Cap Gr
    WORLD BOND LIFNX Laudus Mondrian Intl Fixed Income
    Foreign Large Blend LISOX Lazard Intl Strategic Equity Open
    Multisector Bond LSBRX Loomis Sayles Bond Retail
    DIVERSIFIED PACIFIC/ASIA MAPIX Matthews Asia Pacific Equity Income
    PACIFIC/ASIA EX-JAPAN STK MAPTX Matthews Pacific Tiger Investor
    China Region MCHFX Matthews China Investor
    Muni National Interm MITFX Marshall Intermediate Tax-Free Inv
    JAPAN STOCK MJFOX Matthews Japan Investor
    Foreign Large Blend MKIEX McKee International Equity Instl
    DIVERSIFIED PACIFIC/ASIA MPACX Matthews Asia Pacific Investor
    High Yield Bond MWHYX Metropolitan West High Yield Bond M
    Short-Term Bond MWLDX Metropolitan West Low Duration Bond M
    Intermediate-Term Bond MWTRX Metropolitan West Total Return Bond M
    MID-CAP BLEND NMMCX Northern Multi-Manager Mid Cap
    SMALL VALUE NOSGX Northern Small Cap Value
    Muni National Long NOTEX Northern Tax-Exempt
    Small Growth NSPAX ING Small Cap Opportunities A
    Foreign Small/Mid Value OAKEX Oakmark International Small Cap I
    WORLD STOCK OAKGX Oakmark Global I
    COMMODITIES BROAD BASKET PCRDX PIMCO Commodity Real Ret Strat D
    Emerging Markets Bond PEMDX PIMCO Emerging Markets Bond D
    LARGE BLEND PEOPX Dreyfus S&P 500 Index
    WORLD BOND PFODX PIMCO Foreign Bond (USD-Hedged) D
    Intermediate-Term Bond PGBOX JPMorgan Core Bond A
    Multisector Bond PONDX PIMCO Income D
    LARGE BLEND PRBLX Parnassus Equity Income - Inv
    Inflation-Protected Bond PRRDX PIMCO Real Return D
    SMALL VALUE PSOAX JPMorgan Small Cap Value A
    Intermediate-Term Bond PTTDX PIMCO Total Return D
    SMALL BLEND RYTFX Royce Total Return Svc
    Intermediate-Term Bond SAMIX RidgeWorth Intermediate Bond I
    Foreign Large Blend SICNX Schwab International Core Equity Inst
    Foreign Large Blend SIEIX RidgeWorth Intl Equity Index I
    ULTRASHORT BOND SIGVX RidgeWorth US Gov Sec Ultra-Short Bd I
    Target Date 2031-2035 SRJAX JPMorgan SmartRetirement 2035 A
    DIVERSIFIED EMERGING MKTS SSEMX SSgA Emerging Markets Instl
    High Yield Bond STHTX RidgeWorth High Income I
    Muni National Interm STTBX RidgeWorth Investment Grade T/E Bond I
    LARGE BLEND SWANX Schwab Core Equity Inv
    Global Real Estate SWASX Schwab Global Real Estate Select
    Target Date 2026-2030 SWDRX Schwab Target 2030
    LARGE VALUE SWDSX Schwab Dividend Equity
    Financial SWFFX Schwab Financial Services
    Target Date 2011-2015 SWGRX Schwab Target 2015
    Intermediate Government SWGSX Schwab GNMA
    Long-Short SWHEX Schwab Hedged Equity
    Health SWHFX Schwab Health Care
    Target Date 2021-2025 SWHRX Schwab Target 2025
    Intermediate-Term Bond SWIIX Schwab Premier Income Instl
    Foreign Large Blend SWISX Schwab International Index
    Retirement Income SWKRX Schwab Monthly Income Enh Payout
    Retirement Income SWLRX Schwab Monthly Income Max Payout
    LARGE GROWTH SWLSX Schwab Large-Cap Growth
    Foreign Large Growth SWMIX Laudus International MarketMasters Sel
    Small Growth SWMSX Laudus Small-Cap MarketMasters Select
    Muni National Interm SWNTX Schwab Tax-Free Bond
    Moderate Allocation SWOBX Schwab Balanced Inv
    LARGE BLEND SWPPX Schwab S&P 500 Index
    SMALL BLEND SWSSX Schwab Small Cap Index
    LARGE GROWTH TGCNX TCW Select Equities N
    Mid-Cap Growth TGDNX TCW Growth Equities N
    EQUITY PRECIOUS METALS TGLDX Tocqueville Gold
    LARGE BLEND TICRX TIAA-CREF Social Choice Eq Retail
    LARGE GROWTH TIRTX TIAA-CREF Large-Cap Growth Retail
    LARGE GROWTH TWCGX American Century Growth Inv
    Muni National Interm TWTIX American Century Interm-T Tx-Fr Bd Inv
    SHORT GOVERNMENT TWUSX American Century Short-Term Govt Inv
    LARGE VALUE TWVLX American Century Value Inv
    Foreign Large Value TWWDX Thomas White International
    Foreign Large Growth UMBWX Scout International
    SMALL VALUE VSFAX Federated Clover Small Value A
    Mid-Cap Growth WTMGX Westcore MIDCO Growth
    LARGE VALUE YAFFX Yacktman Focused

     

    Asset Class Number of funds
    Balanced Fund 21
    REITs 2
    Fixed Income 34
    Commodity 1
    Sector Fund 9
    Foreign Equity 18
    Emerging Market Equity 7
    US Equity 41
    Other 4
    Total 137


    As of Apr 5, 2011, 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 (98%)
    Fund Quality -- Rated as average (54%)
    Portfolio Building -- Rated as great (86%)
    Overall Rating: above average (80%)

    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 6 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    US Equity: SPY or VTI
    Commodity: DBC
    Foreign Equity: EFA or VEU
    REITs: IYR or VNQ or ICF
    Emerging Market Equity: EEM or VWO
    Fixed Income: AGG or BND
    Performance chart (as of Apr 5, 2011)

    Performance table (as of Apr 5, 2011)

    With six asset classes and a wide number of funds, the returns beat the six asset class benchmark. With high scores in all categories, this plan delivers portfolios that have produced strong historical returns.

    Symbols: SPY, VTI, EFA, VEU, EEM, VWO, IYR, VNQ, ICF, AGG, BND, DBC, HYG, JNK, PHB, AOM, AOK, CIU, BIV, ITM, MUB, TFI, PZA, MLN, IYH, IXJ, VHT, XBI, PBE, DBR, RYH, EFG, IXP, PTE, DGG, LTL, MTK, PTF, DBT, RYT, ROM, GWL, PFA, IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV, SCZ, EFV, PID, DWM, IYF, VFH, IPF, PFI, DRF, RYF, IFGL, RWX, TZE, TZG, TZI, TZO, TZL, IGOV, BWX, WIP, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IOO, VT, SHY, SHV, VGSH, PLK, USY, IEV, VGK, PEF, DEB, IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG, IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU, 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, GMM, PXH, DEM, SCHE, GBF, LAG, PCY, CSJ, BSV, VCSH, ITE, IXC, IPW, DBE, RYE, DKA, IEI, VGIT, IJK, IWP, VOT, EMG, PWJ, RFG, UKW, IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK, TIP, DBP, EPP, VPL, GMF, PAF, AAXJ, DND, EWJ, JPP, PJO, DXJ, GSG, BIL

    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.

    Originally from the UK, Jenny Hollingworth lives with her husband and two sons in Northern California. She is a wife, mother, writer, theatre director, coffee drinker, avid reader, keen walker, movie watcher, Jane Austen lover and observer of life, in no particular order. MyPlanIQ has no formal relationship with Jenny Hollingworth.

    comments(0)  Share/Bookmark

  • Schwab Select ETF Plan Has Bright Prospects

    04/06/2011

    Schwab ETF Plan Has Good Pedigree and Bright Prospects Retirement is now a "hair on fire" problem. There is much talk of working longer, downsizing, living on less. However, there is something you can do to help improve your risk adjusted returns. Look at your portfolios and plans to build a diversified portfolio with a systematic investment strategy.

    This is not as hard as you might think -- to highlight this point, we feature a plan created by a non professional that matches up well with any of the other plans. Kevin Carr. is an individual investor who employs a long term strategy. He manages an individual common stock portfolio as well as many plans on MyPlan IQ.  If you have any questions regarding this plan please contact him.

    This plan provides you with Schwab's experts’ top picks of low-cost ETFs representing approximately 50 ETFs, based on rigorous criteria including expenses, tracking error, trading volume, and more.  Schwab ETFs trade commission free.  There are no redemption periods so you can start today and not worry about holding periods.

    We report on this Schwab ETF Select List which consists of 49 funds. These funds give exposure to 6 major assets: US Equity, Commodity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.

     

    Asset Class Ticker Name
    LARGE BLEND SCHX Schwab U.S. Large-Cap ETF
    LARGE GROWTH SCHG Schwab U.S. Large-Cap Growth ETF
    LARGE VALUE SCHV Schwab U.S. Large-Cap Value ETF
    MID-CAP BLEND VO Vanguard Mid-Cap ETF
    Mid-Cap Growth VOT Vanguard Mid-Cap Growth ETF
    MID-CAP VALUE VOE Vanguard Mid-Cap Value ETF
    SMALL BLEND SCHA Schwab U.S. Small-Cap ETF
    Small Growth VBK Vanguard Small Cap Growth ETF
    SMALL VALUE VBR Vanguard Small Cap Value ETF
    LARGE BLEND SCHB Schwab U.S. Broad Market ETF
    LARGE VALUE VYM Vanguard High Dividend Yield Indx ETF
    Foreign Large Blend SCHF Schwab International Equity ETF
    Foreign Large Growth EFG iShares MSCI EAFE Growth Index
    Foreign Large Value EFV iShares MSCI EAFE Value Index
    FOREIGN SMALL/MID GROWTH SCHC Schwab International Small-Cap Eq ETF
    DIVERSIFIED EMERGING MKTS SCHE Schwab Emerging Markets Equity ETF
    Foreign Large Blend VEU Vanguard FTSE All-World ex-US ETF
    WORLD STOCK VT Vanguard Total World Stock Index ETF
    EUROPE STOCK VGK Vanguard European ETF
    DIVERSIFIED PACIFIC/ASIA VPL Vanguard Pacific Stock ETF
    JAPAN STOCK EWJ iShares MSCI Japan Index
    China Region GXC SPDR S&P China
    Intermediate-Term Bond BND Vanguard Total Bond Market ETF
    SHORT GOVERNMENT SCHO Schwab Short-Term U.S. Treasury ETF
    Intermediate Government SCHR Schwab Intermediate-Term U.S. Trsy ETF
    LONG GOVERNMENT TLH iShares Barclays 10-20 Year Treasury Bd
    Inflation-Protected Bond SCHP Schwab U.S. TIPS ETF
    Intermediate-Term Bond CIU iShares Barclays Intermediate Credit Bd
    High Yield Bond JNK SPDR Barclays Capital High Yield Bond
    WORLD BOND BWX SPDR Barclays Capital Intl Treasury Bond
    Muni National Long MUB iShares S&P National AMT-Free Muni Bd
    Consumer Discretionary XLY Consumer Discret Select Sector SPDR
    Consumer Staples XLP Consumer Staples Select Sector SPDR
    Equity Energy XLE Energy Select Sector SPDR
    Financial XLF Financial Select Sector SPDR
    Health XLV Health Care Select Sector SPDR
    Industrials XLI Industrial Select Sector SPDR
    Natural Resources XLB Materials Select Sector SPDR
    Technology XLK Technology Select Sector SPDR
    Communications IYZ iShares Dow Jones US Telecom
    Utilities XLU Utilities Select Sector SPDR
    COMMODITIES BROAD BASKET DBC PowerShares DB Commodity Index Tracking
    Commodities Agriculture DBA PowerShares DB Agriculture
    Commodities Precious Metals IAU iShares Gold Trust
    Commodities Industrial Metals DBB PowerShares DB Base Metals
    Commodities Energy USL United States 12 Month Oil
    MISCELLANEOUS SECTOR PFF iShares S&P U.S. Preferred Stock Index
    REAL ESTATE VNQ Vanguard REIT Index ETF


     

    Asset Class Number of funds
    Balanced Fund 0
    REITs 1
    Fixed Income 9
    Commodity 5
    Sector Fund 11
    Foreign Equity 8
    Emerging Market Equity 3
    US Equity 11
    Other 1
    Total 49

    Many are looking for access to a well rounded ETF plan through Schwab. This fills this hole and as Schwab makes more of their own funds available, it will be possible to move them into the plan. On this review, the only comment would be to add another REIT choice. The other asset classes have a good number of selections without being overwhelming.

    As of Apr 4, 2011, 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 (99%)
    Fund Quality -- Rated as average (47%)
    Portfolio Building -- Rated as average (56%)
    Overall Rating: above average (66%)

    Thehigh diversification score means that all the major and minor asset classes have been ticked. Fund quality is lower because some of the ETF's don't have a long history but that shouldn't impede the ability for the future.

    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 6 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    US Equity: SPY or VTI
    Commodity: DBC
    Foreign Equity: EFA or VEU
    REITs: IYR or VNQ or ICF
    Emerging Market Equity: EEM or VWO
    Fixed Income: AGG or BND
    Performance chart (as of Apr 4, 2011)

    Performance table (as of Apr 4, 2011)

    Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    Schwab ETF Select List Tactical Asset Allocation Moderate 9% 82% 8% 72% 12% 89%
    Schwab ETF Select List Strategic Asset Allocation Moderate 14% 118% 3% 15% 4% 20%
    Six Core Asset ETF Benchmark Tactical Asset Allocation Moderate 9% 81% 10% 82% 13% 89%
    Six Core Asset ETF Benchmark Strategic Asset Allocation Moderate 14% 121% 4% 20% 7% 34%


    This portfolio performs well against the six asset ETF benchmark

    • SAA provides lower volatility while albeit delivering lower historical returns but as more of the newer funds are applied to the portfolio, there will be more opportunity for closing the gap
    • The TAA portfolios run neck and neck over the five year period

    In a future article, we will review performance over the last three months to see how the plan has performed in the light of recent events.

    Kay Takeaways

    • Building a plan of funds is not the preserve of the few -- anybody who has the interest and application to research can provide well constructed plans
    • It is possible to benefit from those individuals while still having transparency and not being captive to any particular broker

    Symbols: SPY, VTI, EFA, VEU, EEM, VWO, IYR, VNQ, ICF, AGG, BND, DBC, HYG, JNK, PHB, CIU, BIV, MUB, TFI, PZA, MLN, GII, PUI, DBU, RYU, UPW, IYH, IXJ, VHT, XBI, PBE, DBR, RYH, EFG, IXP, PTE, DGG, LTL, IYM, IGE, VAW, XLB, XME, PYZ, DBN, RTM, UYM, MTK, PTF, DBT, RYT, ROM, GWL, PFA, IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV, EFV, PID, DWM, IYF, VFH, IPF, PFI, DRF, RYF, KXI, VDC, PSL, DPN, RHS, RXI, VCR, IYJ, EXI, VIS, IGOV, BWX, WIP, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IOO, VT, SHY, SHV, VGSH, PLK, USY, TLT, TLH, IEF, EDV, VGLT, TLO, PLW, IEV, VGK, PEF, DEB, IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG, IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU, IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV, IFSM, VSS, SCHC, IJS, IWN, JKL, VBR, DSV, PWY, RZV, UVT, IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA, GMM, PXH, DEM, SCHE, ITE, IXC, IPW, DBE, RYE, DKA, IEI, VGIT, IJK, IWP, VOT, EMG, PWJ, RFG, UKW, IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK, TIP, EPP, VPL, GMF, PAF, EWJ, JPP, PJO, DXJ, GSG

    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.

    comments(1)  Share/Bookmark

  • Vanguard VA Has Some Rules and Can Be Cloned with an ETF Portfolio

    12/08/2010

    In a previous article noted that Variable Annuities have well chosen sub account funds that can lead to a portfolio that can deliver good returns. We now examine the Vanguard Variable Annuity and see how well an ETF clone performs

    The Vanguard Variable Annuity consists of 15 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, REITs, Fixed Income.

    As of Dec 3, 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 (83%) 
    Fund Quality -- Rated as average (64%) 
    Portfolio Building -- Rated as above average (75%) 
    Overall Rating: above average (74%)

     

    Asset Class

    Vanguard Schwab

    Fidelity

    US

    8 35

    13

    International

    1 5

    5

    Sector

    0 3

    12

    Balanced

    1 2

    8

    Fixed income

    4 9

    7

    Emerging Markets

    0 1

    3

    Real estate

    1 1

    1

    Target Date

    0 0

    7


    Compared to Schwab and Fidelity, the number of fund choices are significantly fewer leading to greater stress on the fund quality. This has a lower rating than the other two and so we would expect the returns to be lower.

    We also note that the Vanguard annuity has additional restrictions. They limit the trading on any one fund to two sell-buy trips in a year. With the smaller number of funds, this could be a significant restriction.

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA andTAA , 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 Dec 3, 2010)

    Performance table (as of Dec 3, 2010)


    The annuity performs well against our benchmark -- indicating a good choice of funds

    We are now going to build a clone plan and see how it performs. We will simplify the choice and not duplicate styles.

    US Funds

    Style Fidelity ETF

    LARGE BLEND

     VDEQX  VLISX  VTSMX 

     VTI

    LARGE GROWTH

     VHCAX  VIGAX  

     VUG

    LARGE VALUE

    VEIPX

     VTV

    MID-CAP BLEND

    VIMSX

     VO


    The US funds choice is very wide. There are probably too many choices in this category and it would be better to have more choices in other asset classes.

    We will not mirror all the choices with the ETF clone just one ETF in each style category.

    International Funds

    Style Fidelity ETF

    Foreign Large Growth

    VGTSX

     EFA


    It would have been better to have some mid or small cap alternatives but still a good amount of choice.

    We will match one style in each category in the international asset class.


    Real Estate

    Styles Fidelity ETF

    REAL ESTATE

     VGSIX

    IYR, RWX


    Real estate is under represented -- an international REIT would strengthen this asset class.

    We add an international REIT Fund to the ETF's.

    Fixed Income

    Style Fidelity ETF

    High Yield Bond

     VWEAX

     HYG

    Intermediate-Term Bond

    VBMFX

     BND

    Cash

     CASH

    CASH

    Short-Term Bond

     VFSTX

     SHY


    The fixed income class is well balanced with good choices and diversification.

    We match this with the exception of having a second intermediate term bond. We add an emerging markets bond to offset this.

     We now compare the returns of the two plans using tactical and asset allocation strategies with a moderate risk portfolio.

     

     
    Strategic Asset Allocation 1Yr
    AR
    1Yr Sharpe 3Yr
    AR
    3Yr Sharpe 5Yr
    AR
    5Yr Sharpe
    Strategic Asset Allocation Growth Customize 14% 96% 1% 1% 6% 22%
    Strategic Asset Allocation Moderate Customize 12% 105% 1% 6% 5% 26%
    Strategic Asset Allocation Conservative Customize 9% 119% 2% 16% 5% 35%

    Tactical Asset Allocation 1Yr
    AR
    1Yr Sharpe 3Yr
    AR
    3Yr Sharpe 5Yr
    AR
    5Yr Sharpe
    Tactical Asset Allocation Growth Customize 10% 64% 6% 44% 10% 70%
    Tactical Asset Allocation Moderate Customize 8% 64% 5% 48% 8% 75%
    Tactical Asset Allocation Conservative Customize 6% 81% 4% 61% 7% 86%
     

     

    The Variable Annuity Portfolios have a clear lead over its ETF clone. The reason for this is the larger number of funds to allow styles rotation. One important note is that the returns are before fees are assessed. Variable annuities are complex instruments with fees that can be in excess of 2% of the asset base per year. Even so, the historical returns are good and there is the benefit that gains are not taxed.

    Looking at the fund design for Variable Annuities can be instructive to allow you to build a plan that enables portfolios that give you good risk adjusted returns.

     

    labels:investment,

    Symbols:AGG,AOK,AOM,BIV,BND,BSV,CIU,CSJ,DBC,DBE,DBN,DBR,DBT,DBU,DEM,DES,DGG,DKA,DLN,DON,DPN,DRF,DSC,DWM,EEM,EFA,EFG,EFV,ELG,ELV,EMG,EMM,EMV,EXI,EZM,GBF,GII,GMM,GWL,HYG,ICF,IGE,IJH,IJJ,IJK,IJR,IOO,IP,IPF,IPW,ITE,IVE,IVV,IVW,IWM,IWP,IWR,IWS,IWV,IWW,IWZ,IXC,IXJ,IXP, ,

     

    comments(0)  Share/Bookmark

  • ETF Cloning of the Schwab VA

    11/30/2010

    In a previous article noted that Variable Annuities have well chosen sub account funds that can lead to a portfolio that can deliver good returns. We now examine the Schwab Select Annuity, compare it with the Fidelity Personal Retirement Annuity and see how well an ETF clone performs

    In Summary, the Fidelity Personal Retirement Annuity's plan consists of 56 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, REITs, Emerging Market Equity and Fixed Income.

    Asset Class

    Schwab

    Fidelity

    US

    35

    13

    International

    5

    5

    Sector

    3

    12

    Balanced

    2

    8

    Fixed income

    9

    7

    Emerging Markets

    1

    3

    Real estate

    1

    1

    Target Date

    0

    7


    We are now going to build a clone plan and see how it performs. We will simplify the choice and not duplicate styles.

    US Funds

    Style Fidelity ETF

    LARGE BLEND

     DGAGX  KBCAX  PIODX  PJIAX  SICWX  SWHGX  SWPPX

     VTI

    LARGE GROWTH

     AAGOX  JGIIX  NMTBX  SDGAX

     VUG

    LARGE VALUE

     ACGMX  ACSDX  AVLIX  KDCAX  MEIIX

     

     VTV

    MID-CAP BLEND

     GMCBX  GTAVX  RMVSX  SOPVX

     VO

    Mid-Cap Growth

     AMGOX  BGRFX  DFCIX  TEGAX

     IJK

    Mid-Cap Growth

     FMCCX

     

    MID-CAP VALUE

    ABASX
    AVUA 
    IPVIX 

     IJJ

    SMALL BLEND

    KDSAX
    SMEIX

     VB

    Small Growth  PGOFX  SIGWX  SSDAX  VBK
    Small Value  CSSBX  DEVLX  FBVAX  VBR


    The US funds choice is very wide and here we will not mirror all the choices just one in each style category.

    International Funds

    Style Fidelity ETF

    World Stock

     JWGRX

     EFA

    World Stock

     OGLYX

     VT


    Similarly we will match one style in each category in the international asset class.

    Emerging markets

    Style Fidelity ETF

    Emerging Markets

     LZEMX

     EEM

     

       


    We select two emerging market ETF's to provide an alternative style.

    Real Estate

    Styles Fidelity ETF

    REAL ESTATE

     IYR

    IYR, RWX


    Real estate is under represented -- an international REIT would strengthen this asset class. We will add an international REIT Fund to the ETF's.

    Fixed Income

    Style Fidelity ETF

    Emerging Markets Bond

     MSIEX

     EMB

    High Yield Bond

     FHNIX

     HYG

    Inflation-Protected Bond

     PRRIX

     TIP

    Intermediate-Term Bond

     FBNDX

    BND

    Intermediate-Term Bond

     PTTRX

     

    Cash

     CASH

    CASH

    Short-Term Bond

     PTLDX

     SHY


    The fixed income class is well balanced with good choices and diversification. We match this with the exception of having a second intermediate term bond.

    We are not attempting to match any of the balanced funds as there is no opportunity to use these in a standalone portfolio. While the managed funds are available, the fee structure is such that the returns are going to leak into other people's pockets and it will pay you to be on top of your own investments -- either directly or through a professional.

    We now compare the returns of the two plans using tactical and asset allocation strategies with a moderate risk portfolio.

     

    Performance chart (as of Nov 19, 2010)

    Performance table (as of Nov 19, 2010)



    The Variable Annuity Portfolios have a clear lead over its ETF clone. The reason for this is the larger number of funds to allow styles rotation.

    In fact, to get similar performance using ETF's, you would need to go to one of the richest plans -- provided by TD Ameritrade. The comparison is below.

    Performance chart (as of Nov 19, 2010)

    Performance table (as of Nov 19, 2010)

     


    One important note is that the returns are before fees are assessed. Variable annuities are complex instruments with fees that can be in excess of 2% of the asset base per year. Even so, the historical returns are good and there is the benefit that gains are not taxed.

    Looking at the fund design for Variable Annuities can be instructive to allow you to build a plan that enables portfolios that give you good risk adjusted returns.

     

    labels:investment,

    Symbols:AGG,AOK,AOM,BIV,BND,BSV,CIU,CSJ,DBC,DBE,DBN,DBR,DBT,DBU,DEM,DES,DGG,DKA,DLN,DON,DPN,DRF,DSC,DWM,EEM,EFA,EFG,EFV,ELG,ELV,EMG,EMM,EMV,EXI,EZM,GBF,GII,GMM,GWL,HYG,ICF,IGE,IJH,IJJ,IJK,IJR,IOO,IP,IPF,IPW,ITE,IVE,IVV,IVW,IWM,IWP,IWR,IWS,IWV,IWW,IWZ,IXC,IXJ,IXP,

     

    comments(0)  Share/Bookmark

  • Can we Beat Morningstar Bond Managers with ETF's

    11/26/2010

    In a previous article we questioned conventional wisdom that risk based assets as the main engine of portfolio growth. We presented a simple investment strategy -- pick the top seven bond managers and own the top performing bond fund which you review on a monthly basis (or quarterly if you prefer).

    Currently, the top seven are:

    Bond Fund

    Ticker

    PIMCO Total Return

    PTTRX

    TCW Total Return Bond

    TGLMX

    Western Asset Core Bond

    WATFX

    Metropolitan West Total Return Bond

    MWTRX

    Loomis Sayles Bond

    LSBDX

    Dodge & Cox Income

    DODIX

    FPA New Income

    FPNIX

     


    In this article, we examine other bond only plans and see if the results can compete.

    There are two other portfolios we present.

    Goldman Sachs Global Tactical Asset Allocation:This is a cross-asset (or multi-asset) momentum based tactical asset allocation. This is based on a published report by Goldman Sachs on some of their funds. This is a simplified interpretation of strategies proposed by Goldman Sachs on Global Tactical Asset Allocation. The original strategy is based on the following:

    • Among six asset classes: US equity (represented by ETF S&P 500 Spider SPY), International equity (represented by MSCI ETF EFA), Real Estate (represented by NAREI ETF IYR), Commodities (represented by Goldman Sachs commodity index ETF GSG), US aggregate bond (represented by ETF AGG), cash, simply calculate the previous 12 month return at year end.
    • Rank the year end returns among these 6 assets.
    • Choose the top 3 assets and invest these top 3 assets for the next year in equal money amount.

    We have modified this by removing all the risk based assets and replaced the aggregate bonds with US long term treasury bond fund. In addition, any asset has to have the score higher than CASH to qualify for the purchase.

    This allows the best bond funds to be selected based on their momentum.

    TDA Ameritrade's Commission Free ETFs
    We recently reviewed their plan with over 100 commission free ETFs. We use this plan but drove the strategy to select only bond funds using MyPlanIQ's tactical asset allocation.

    Given that some of the ETFs don't have a long history, we only went back to 2007. It is possible to see the impact of the strategies b


    Portfolio Performance Comparison
    Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    Best of Bonds (BoB) 9% 194% 12% 199% 11% 165%
    Bond ETFs 8% 86% 4% 38% 4% 33%
    Gold-Sachs-Bonds-TAA 9% 123% 7% 88% 6% 68%

     
    Click for full details

    Looking over a five year horizon, it is clear that BoB delivers the best results by quite a margin. In the shorter term, the results are much closer and as more fixed income ETF's become established and liquid, it will be worth watching and paying a return visit to look at returns in the future.

    For now, the simplicity of the approach and the strength of the results leave BoB out in front. In this case, actively managed funds appear to beat the index funds.

     

    labels:investment,

    Symbols:SPY,VTI,EFA,VEU,EEM,VWO,IYR,VNQ,ICF,AGG,BND,HYG,JNK,PHB,CIU,BIV,GII,PUI,DBU,RYU,UPW,IYH,IXJ,VHT,XBI,PBE,DBR,RYH,IXP,PTE,DGG,LTL,IYM,IGE,VAW,XLB,XME,PYZ,DBN,RTM,UYM,MTK,PTF,DBT,RYT,ROM,GWL,PFA,IVE,IWW,JKF,VTV,ELV,PWV,RPV,SCHV,IYF,VFH,IPF,PFI,DRF,RYF,KXI,

     

    comments(0)  Share/Bookmark

  • Top Tier ETF Broker Finalists

    10/28/2010

  • Top Tier ETF Broker Playoffs II

    10/26/2010

First   1   Last  

Members enjoy Free features

  • Customize and follow a diversified strategic allocation portfolio for your 401k, IRA and brokerage investments within minutes
  • Receive monthly or quarterly re-balance emails
  • Enter funds and percentages in your portfolio, see its historical performance and receive ongoing rebalance emails
  • Real time fund ranking and selection for your plans
  • Quality retirement investing newsletter emails
  • Fund ranking and selection for your plans

Tens of thousands of users have signed up!

Join Now (Free)
No Credit Card Required

User names can only consist of alphabetic and
numeric characters.(eg: 0-9a-zA-Z)
I agree to the Terms of use

Login With Facebook:

Get Started Now. It's Free!

Get portfolio suggestions for your
401k plan or brokerage accounts

Powered by MyPlanIQ
You have created an account on MyPlanIQ.com by using this email "", please login MyPlanIQ account or reset your password.