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Articles on FDX

  • UPS, Fedex Square off in Retirement Plans

    04/19/2011

    The combination of a robust U.S. equity market and the proliferation of company-sponsored retirement plans helped push total assets in 401(k) pans over the $3 trillion threshold at close of last year, up 13% from 2009. The incidents in Japan, the Middle East and even as far back as New Orleans teach us the danger of living on borrowed time, the reactors, the governments the levees keeping things going -- just one more year. The temptation to delay until next time is very seductive until disaster strikes and the cost to repair, dwarfs the cost to prevent. Many working people put off their retirement investing -- just one more year until it becomes a "hair on fire" problem -- which it now is for baby boomers for whom retirement is a near and present danger.

    The starting point for any retirement investing is the company provided retirement plan. Not all plans are created equal. Not all plans have the same number of choices, asset classes, quality of funds and, most importantly, risk adjusted returns.

    The list of minor asset classes covered by UPS Savings Plan The list of minor asset classes covered by Federal Express (FedEx) 401K Plan for Pilots
    Emerging Markets Bond: BAEDX
    Foreign Large Blend: EFA
    Inflation-protected Bond: BPRAX
    Intermediate-term Bond: SSINX, SBMRX
    Large Blend: SVSPX
    Mid-cap Blend: MDY
    Real Estate: VGSIX
    Retirement Income: VTINX
    Small Blend: IWM
    Target Date 2000-2010: VTENX
    Target Date 2011-2015: VTXVX
    Target Date 2016-2020: VTWNX
    Target Date 2021-2025: VTTVX
    Target Date 2026-2030: VTHRX
    Target Date 2031-2035: VTTHX
    Target Date 2036-2040: VFORX
    Target Date 2041-2045: VTIVX
    Target Date 2050+: VFIFX
    Conservative Allocation: VSCGX
    Foreign Large Blend: VGTSX
    Foreign Large Value: VTRIX
    Inflation-protected Bond: VIPSX
    Intermediate-term Bond: VBTIX
    Large Blend: VIFSX
    Large Value: VWNDX
    Mid-cap Blend: VEMSX, VMISX
    Moderate Allocation: VWELX, VSMGX
    Retirement Income: VTINX
    Small Blend: VSISX
    Target Date 2000-2010: VTENX, VTOVX
    Target Date 2011-2015: VTXVX
    Target Date 2016-2020: VTWNX
    Target Date 2021-2025: VTTVX
    Target Date 2026-2030: VTHRX
    Target Date 2031-2035: VTTHX
    Target Date 2036-2040: VFORX
    Target Date 2041-2045: VTIVX
    Target Date 2050+: VFIFX

     

    Asset Class UPS Savings Plan Federal Express (FedEx) 401K Plan for Pilots
    REITs 1 0
    Balanced Fund 10 14
    Fixed Income 4 2
    Sector Fund 0 0
    Foreign Equity 1 2
    US Equity 3 5
    Other 0
    0
    Total 19 23

     

    Fedex has more funds but have one less asset class -- UPS has REITs and Fedex does not. Neither company provides Emerging Markets or Commodity funds.

    Both companies have a wide choice of Target Date funds which may appeal to some but are expensive and have mixed reviews as to their value for money.

    It is interesting that UPS has emerging market bonds but no emerging ma
    There are easy ways to improve these plans with emerging market and commodity exposure.

    As of Apr 18, 2011, UPS Savings Plan investment choice is rated as average and Federal Express (FedEx) 401K Plan for Pilots investment choice is rated as below average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

    Attribute UPS Savings Plan Federal Express (FedEx) 401K Plan for Pilots
    Diversification above average (85%) below average (13%)
    Fund Quality below average (21%) average (47%)
    Portfolio Building above average (66%) below average (31%)
    Overall Rating average (58%) below average (31%)

     


    Performance chart (as of Apr 18, 2011)

    Performance table (as of Apr 18, 2011)

    Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    UPS Savings Plan Tactical Asset Allocation Moderate 10% 77% 10% 102% 10% 98%
    UPS Savings Plan Strategic Asset Allocation Moderate 7% 55% 1% 9% 3% 11%
    Federal Express 401K Plan Tactical Asset Allocation Moderate 4% 39% 7% 73% 7% 69%
    Federal Express 401K Plan Strategic Asset Allocation Moderate 8% 87% 4% 36% 6% 41%
    Six Core Asset ETF Benchmark Tactical Asset Allocation Moderate 10% 71% 9% 73% 13% 91%
    Six Core Asset ETF Benchmark Strategic Asset Allocation Moderate 13% 103% 3% 20% 7% 35%


    Currently Commodities, Real Estate and US Equity are doing well. US Equity and Real Estate available to UPS Savings Plan participants Only US Equities are available to FedEx participants.

    When we add the six asset class SIB benchmark to the table, it is possible to see how the two compare against a reference.

    Takeaways

    • The UPS plan with its extra asset class has a three point lead over the FedEx plan when comparing tactical asset allocation
    • The Six asset class benchmark has a three point lead over the UPS plan when comparing tactical asset allocation
    • The FedEx plan without the recent burden of the Real Estate crash beats UPS when comparing strategic asset allocation
    • The Six asset class benchmark beats the FedEx plan over five years where emerging markets and commodities offset the drag of real estatewhen comparing strategic asset allocation


    With either plan, augmenting a retirement portfolio with emerging market equities and commodities will provide better diversification and likely higher risk adjusted returns. As inflation seems like a near certainty, commodity exposure becomes increasingly important.


    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: UPS, FDX, BAEDX, EFA, BPRAX, SSINX, SBMRX, SVSPX, MDY, VGSIX, VTINX, IWM, VGTSX, VTRIX, VIPSX, VBTIX, VIFSX, VWNDX, VEMSX, VMISX, VWELX, VSMGX, VTINX, VSISX, AGG, BND, VTI, VNQ, IYR, DBC, VWO, EEM, EFA


    Exchange Tickers: (UPS), (FDX), (BAEDX), (EFA), (BPRAX ), (SSINX), (SBMRX), (SVSPX), (MDY), (VGSIX), (VTINX), (IWM), (VGTSX), (VTRIX), (VIPSX), (VBTIX), (VIFSX), (VWNDX), (VEMSX), (VMISX), (VWELX), (VSMGX), (VTINX), (VSISX), (AGG), (BND), (VTI), (VNQ), (IYR), (DBC), (VWO), (EEM), (EFA)

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  • JPMorgan Chase -- Top Tier Company -- Second Tier Retirement Plan

    01/15/2011

    We have examined the retirement plans of two of the major players in shipping and logistics. UPS  has a four asset class plan and Fedex has a three asset class plan.

    We now compare them side by side and see how the different attributes of the plans lead to different results.

    The funds line up


    Asset ClassUPSFedex
    Balanced Fund 10 14
    REITs 1  
    Fixed Income 4 2
    Commodity 0  
    Sector Fund 0  
    Foreign Equity 1 2
    Emerging Market Equity 0  
    US Equity 3 5
    Other 3  
    Total 22 23


    Both companies offer a large number of balanced funds that include target date funds. UPS has a better selection of fixed income but FEDEX has more choices in international and US Equities.

    In general, both would do better to have more choices in each of their funds. One choice in REIT and foreign equity for UPS is low.

    Rating Attribute

    UPS

    Fedex

    Diversification

    84%

    15%

    Fund Quality

    24%

    43%

    Portfolio Building

    73%

    40%

    Overall Rating

    62%

    33%

     
    We note that UPS gets much higher marks for having the extra asset class. UPS has an emerging market bond fund which provides additional exposure in bonds which further boosts its rating. Fedex does not score highly.

    Fedex does beat out UPs in fund quality but with a better choice of funds, UPS gives a better portfolio mix.

    The result is that the UPS plan scores more highly than the FEDEX plan.

    We now line up returns performance for the last five years and see how this plays out.


    Performance chart (as of Jan 11, 2011)

    Performance table (as of Jan 11, 2011)

    Portfolio Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe
    UPS Savings Plan Tactical Asset Allocation Moderate 15% 105% 9% 93% 10% 91%
    UPS Savings Plan Strategic Asset Allocation Moderate 8% 64% 1% 5% 3% 7%
    Federal Express (FedEx) 401K Plan for Pilots Tactical Asset Allocation Moderate 6% 51% 6% 68% 7% 65%
    Federal Express (FedEx) 401K Plan for Pilots Strategic Asset Allocation Moderate 9% 91% 4% 25% 5% 36%

    Currently US Equity, Commodities and Real Estate are doing well. US Equity and Real Estate available to UPS Savings Plan participants whereas only US Equity is available to the Fedex participants,

    We note the behavior of the FEDEX plan is consistent with the majority of plans we have analyzed: The one year returns for SAA beat out the TAA performance. The strong US and other equity markets created a bull market and SAA will usually outperform in those circumstances. Over the longer term where there are a mix of favorable and unfavorable conditions, TAA limits losses which compensates for the reduced upside.

    The UPS plan, with its larger number of asset classes should, in theory, give better returns -- which it does in TAA but not in SAA and this is worth some explanation.

    For the one year returns

    • The tactical asset allocation was able to provide better returns by virtue of having a range of bond and balanced funds which provided some upside to the rather dismal bond behavior
    • TAA was able to take advantage of moving in and out of US equities when they fell back in the middle of the year
    • TAA didn't have positions in international equity until late in the year
    • The SAA had to take the US and international equities hit and had nothing to offset the gain
    • Real estate was a constant factor for both 

    When we look over the longer term horizon, we note that while the four asset TAA strategy is at the top, the four asset class SAA comes below the three asset class SAA.

    The reason for this is that the real estate asset class was hammered over the last five years and has significantly hampered performance. The TAA strategy avoided much of the loss by moving out of equities all together.

    The Fedex plan, while suffering the drop in US and international equities, did not have the real estate asset class and so was hit slightly less.

    In the longer term, as real estate continues to recover and uncorrelated asset classes return to more normal behavior, we expect the standard patter to re-emerge. However, it is caveat emptor -- let the buyer be informed!


    Takeaway
    • 2007 to date has given us unprecedented financial markets that have challenged conventional wisdom and stressed assumptions for investment plans
    • There are special cases where strategies perform in a counter-intuitive manner
    • It's critical not to be caught up in the  exuberance of the last year and especially the last quarter and forget the gut wrenching days that so quickly fade
    • It is critical to understand your asset class choices and the risk and reward they offer.

    labels; investment
    Symbols:UPS,FDX,SPY,VTI,EFA,VEU,EEM,VWO,AGG,BND,HYG,JNK,PHB,AOM,CIU,BIV,MTK,PTF,RYT,ROM,GWL,PFA,IVE,IWW,JKF,VTV,PWV,RPV,SCHV,EFV,PID,DWM,IVV,IYY,IWV,VV,DLN,RSP,SCHX,IVW,IWZ,JKE,VUG,QQQQ,RPG,SCHG,IJJ,IWS,JKI,VOE,PWP,RFV,UVU,IJH,IWR,JKG,VO,MDY,EMM,PJG,DON,EZM,MVV,


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  • FEDEX Doesn't Deliver on It's Retirement Plan

    01/07/2011

    FedEx Corporation (FDX) provides transportation, e-commerce, and business services in the United States and internationally. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. The company was founded in 1971 and is headquartered in Memphis, Tennessee.

    We report on the FedEx 401K Plan for Pilots. We discuss investment choices and present plan rating. Their plan consists of 23 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.

     

    The list of minor asset classes covered:
    Conservative Allocation: AOK
    Foreign Large Blend: EFA, VEU, GWL, PFA
    Foreign Large Value: EFV, PID, DWM
    Inflation-protected Bond: TIP
    Intermediate-term Bond: AGG, CIU, BIV, BND
    Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
    Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV
    Mid-cap Blend: IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV
    Moderate Allocation: AOM
    Retirement Income:
    Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
    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 2036-2040: TZV
    Target Date 2041-2045:
    Target Date 2050+:

     

    Asset Class Number of funds
    REITs 0
    Balanced Fund 14
    Fixed Income 2
    Commodity 0
    Foreign Equity 2
    Emerging Market Equity 0
    US Equity 5
    Total 23

    With a large number of balanced or target date funds, participants don't have a great deal of freedom to build a high performance portfolio using asset allocation. The number of funds in the US asset class is fine, foreign equity is OK but there should be more funds in fixed income and, ideally, at least one more asset class. The plan rating will reflect this.

    As of Jan 5, 2011, this plan investment choice is rated as below 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 below average (15%)
    Fund Quality -- Rated as average (43%)
    Portfolio Building -- Rated as average (40%)
    Overall Rating: below average (33%)

     

     

    Current Economic and Market ConditionsAmericans 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.

    2010 ended very strongly for US equities. Going forward, it is going to be increasingly important to have a wide range of asset classes including commodities and real estate as inflation is likely to creep in as US government intervention in the economy has to be funded.

    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 the FEDEX 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 3 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETF equivalents:

    US Equity: SPY or VTI
    Foreign Equity: EFA or VEU
    Fixed Income: AGG or BND
    Performance chart (as of Jan 5, 2011)

    Performance table (as of Jan 5, 2011)

    Currently Commodities, US Equity and Emerging Market are doing well. Only US Equity is available to Federal Express plan participants.

    This plan beats the three asset benchmark by virtue of the US asset class choices. If would be a stronger plan with more fixed income choices and an additional asset class.

    To summarize, FedEx 401K Plan participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Federal Express  would do well by their employees to consider reviewing their existing funds and adding an additional asset class.

     

    labels:investment,

    Symbols:FDX,SPY,VTI,EFA,VEU,EEM,VWO,AGG,BND,HYG,JNK,PHB,AOM,CIU,BIV,MTK,PTF,RYT,ROM,GWL,PFA,IVE,IWW,JKF,VTV,PWV,RPV,SCHV,EFV,PID,DWM,IVV,IYY,IWV,VV,DLN,RSP,SCHX,IVW,IWZ,JKE,VUG,QQQQ,RPG,SCHG,IJJ,IWS,JKI,VOE,PWP,RFV,UVU,IJH,IWR,JKG,VO,MDY,EMM,PJG,DON,EZM,MVV,

     

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