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  • Schwab Mutual Funds Beat out ETFs

    04/06/2011

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    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.

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  • 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.

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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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  • American Flies Above United in Plan Structure, Below United in Returns

    01/06/2011

     

    AMR Corporation, through its subsidiaries, operates as a scheduled passenger airline in the United States. The company, through its principal subsidiary, American Airlines, Inc., provides scheduled airline service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe, and Asia. The company was founded in 1934 and is headquartered in Fort Worth, Texas.

    Their 401K plan consists of 27 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income.

     

    Asset Class Number of funds
    REITs 0
    Balanced Fund 2
    Fixed Income 6
    Commodity 0
    Sector Fund 1
    Foreign Equity 3
    Emerging Market Equity 2
    US Equity 12
    Other 1
    Total 27

    The list of minor asset classes covered:
    Diversified Emerging Mkts: EEM, GMM, PXH, DEM, SCHE
    Foreign Large Blend: EFA, VEU, GWL, PFA
    Foreign Large Value: EFV, PID, DWM
    High Yield Bond: HYG, JNK, PHB
    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
    Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
    Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
    Moderate Allocation: AOM
    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

    As of Jan 4, 2011, this plan investment choice is rated as 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 (87%)
    Fund Quality -- Rated as average (51%)
    Portfolio Building -- Rated as below average (34%)
    Overall Rating: average (55%)

    Portfolio Discussions

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

    US Equity: SPY or VTI
    Foreign Equity: EFA or VEU
    Emerging Market Equity: EEM or VWO
    Fixed Income: AGG or BND
    Performance chart (as of Jan 4, 2011)

    Performance table (as of Jan 4, 2011)

    Currently Commodities, US Equity and Emerging Market are doing well.

    The plan gives participants access to two of those three classes: US Equity and Emerging Market

    Over the long haul, this plan comes in under the 4 asset class benchmark which is a cause for concern. Four asset classes are good, the number of funds in the US and fixed income are good. Foreign equity and emerging markets could benefit from a couple of extra funds. There has to be some question on the performance of the individual funds.

    When we compare the American Plan with the United plan which only has good funds in three asset classes, we see that the additional asset class does not deliver higher returns.

    Performance chart (as of Jan 4, 2011)

    Performance table (as of Jan 4, 2011)


    To summarize, American Airlines 401k Super Saver Plan participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    American Airlines 401k Super Saver Plan would do well by their employees to consider reviewing their existing funds to take full advantage of the extra asset class.

     

    labels:investment,

    Symbols:AMR,UAUA,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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  • Allegheny Ludlum Corporation 401K Plan Is Rated As Above Average

    12/06/2010

  • Can we Beat Morningstar Bond Managers with ETF's

    11/26/2010

  • Top Tier ETF Broker Finalists

    10/28/2010

First   1   Last  

  • Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Report On 12/03/2010

    12/03/2010

    This report reviews Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account 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 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan can achieve reasonable investment results using asset allocation strategies.

    Plan Review and Rating

    --

    Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan's 401K plan consists of 55 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Commodity, Emerging Market Equity, Fixed Income. The list of minor asset classes covered:

    Commodities Broad Basket: GSG, DBC
    Conservative Allocation: AOK
    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
    Foreign Large Blend: EFA, VEU, GWL, PFA
    Foreign Small/mid Growth: IFSM, VSS, SCHC
    Health: IYH, IXJ, VHT, XBI, PBE, DBR, RYH
    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
    Latin America Stock: ILF, GML
    Long Government: TLT, TLH, IEF, EDV, VGLT, TLO, PLW
    Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
    Multisector Bond: AGG, GBF, BND, LAG
    Natural Resources: IYM, IGE, VAW, XLB, XME, PYZ, DBN, RTM, UYM
    Pacific/asia Ex-japan Stk: EPP, AAXJ, GMF, PAF, DND
    Short Government: SHY, SHV, VGSH, PLK, USY
    Short-term Bond: CSJ, BSV, VCSH
    Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
    Technology: MTK, PTF, DBT, RYT, ROM

    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 (91%)
    Fund Quality -- Rated as (48%)
    Portfolio Building -- Rated as (84%)
    Overall Rating: (75%)

    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 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account 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)
    Emerging Market Equity: (EEM or VWO)
    Fixed Income: (AGG or BND)

    Performance chart (as of Dec 2, 2010)

    Performance table (as of Dec 2, 2010)

    Currently, asset classes in Foreign Equity (EFA,VEU), Emerging Market Equity (EEM,VWO) and Fixed Income (AGG,BND) are doing relatively well. These asset classes are available to Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan participants.

    To summarize, Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Symbols: ATI , SPY , VTI , EFA , VEU , EEM , VWO , AGG , BND , DBC , AOK , CIU , BIV , IYH , IXJ , VHT , XBI , PBE , DBR , RYH , IYM , IGE , VAW , XLB , XME , PYZ , DBN , RTM , UYM , MTK , PTF , DBT , RYT , ROM , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , 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 , IFSM , VSS , SCHC , GMM , PXH , DEM , SCHE , GBF , LAG , CSJ , BSV , VCSH , ITE , IXC , IPW , DBE , RYE , DKA , ILF , GML , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK , TIP , EPP , VPL , GMF , PAF , AAXJ , DND , GSG

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