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Articles on SBMRX

  • 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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