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Articles on SCHE

  • Emerging Markets Help Diversification, Risk and Returns

    04/21/2011

    The volatility in stocks of developed nations during recession encourages diversification.  Today investors are diversifying their portfolio by investing in multiple portfolios nationally, regionally, industrially and sectors.

    One area for diversification is emerging markets which give us the possibilities of strong returns and a market that behaves differently than developed nations’ equities. 

    Tighter monetary policies implemented by China and India, with their fast growing economies, helped drive global growth over the past few years. We believe that the emerging market returns may prove less vigorous after two year impressive gains.

    However governments of these nations have taken measures to overcome inflation by increasing interest rates and they are supported by moderate consumer growth. Emerging market stocks show a reasonable gain on the whole, particularly in solid corporate earnings and growth prospects.

    Today emerging market specialists look at:

    • Technology with demands for new products
    • Telecommunications that offer dividend and earnings growth
    • Consumer companies that saw sharp share price run-ups last year

    They shy away from

    • Financial stocks in a higher interest rate environment because of the monetary policy
    • Companies that face increased competition from large multinational corporations.

    The table shows the major emerging market diversified ETFs

     

    Description

    Symbol

    1 Yr

    3 Yr

    5 Yr

    Avg. Volume(K)

    1 Yr Sharpe

    WisdomTree Emerging Markets Equity Income

    DEM

    19.2%

    9.22%

    NA

    234

    84.76%

    PowerShares DWA Em Mkts Technical Leaders

    PIE

    17.36%

    -4.93%

    NA

    355

    75.05%

    Vanguard MSCI Emerging Markets

    VWO

    15.65%

    2.76%

    10.11%

    22,113

    74.53%

    PoweShares FTSE RAFI Emerging Markets

    PXH

    12.87%

    4.33%

    NA

    123

    66.99%

    Schwab Emerging Markets

    SCHE

    14.1%

    NA

    NA

    222

    65.93%

    iShares MSCI Emerging Markets

    EEM

    13.21%

    2.88%

    9.27%

    69,534

    59.85%

    The overall returns from the emerging market ETF’s are robust with many new ETF’s becoming available. The robust profits induced new ETF’s which have a significant history.

    In terms of five years returns VWO & EEM are the best with returns of 9.27% & 10.11% well above the five year benchmark interest rates. The volumes are also large indicating high levels of liquidity. In term of 1 year returns VWO & EEM again are top with returns of 15.65% & 13.21%.

    It is important to consider risk factors: Investing in Emerging markets can be subject to currency risk in exchange rate and restrictions on the movement of foreign currency. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

    In addition, there may be less governmental supervision and regulations and political instability.

    Despite this, emerging market equities from an important part of a portfolio. Regional diversification provides a hedge against volatility in the USA and other developed markets. This helps with our objective to maximize returns on portfolio while minimizing risk.

    Symbols: DEM, VWO, PXH, PIE, SCHE, EEM

    Disclaimer:

    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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  • Emerging Markets Demand Diversification

    04/13/2011

    Diversification is the theme that has emerged since. August 2008. Today investors are diversifying in multiple dimensions: nationally, regionally, industrially and from a sector perspective.

    Emerging markets offer the possibility of good returns but there is some risk. Inflationary pressures and the impact of tighter monetary policies in China and India, with their fast growing economies, helped drive global growth over the past few years. The sharp capital inflows that buoyed emerging markets assets in 2010 could also reverse if economies experience a sudden slowdown.

    Emerging market returns may prove less robust in the coming months after two years of impressive gains. However emerging markets governments that have enough flexibility to effectively manage inflation are likely to continue expanding at healthy rates, supported by moderate consumer growth. Emerging markets stock valuations also appear to be reasonable on the whole, particularly in light of solid corporate earnings and growth prospects, and managers believe there are myriad investment opportunities.

    Portfolio managers and analysts favour technology that is likely to profit from demand for new products as well as telecommunications providers that offer dividends and earnings growth. Consumer companies remain an area of considerable interest, as stocks witnessed sharp share price run-ups last year.

    The same group has become more cautious about some financial stocks in a higher interest rate environment and amid the prospect of tighter regulations for banks. They are also cautious about those that face increased competition from larger multinational corporations.

    Please find below the table of major emerging market diversified ETFs

     

    Description

    Symbol

    1 Yr

    3 Yr

    5 Yr

    Avg. Volume(K)

    1 Yr Sharpe

    WisdomTree Emerging Markets Equity Income

    DEM

    21.48%

    10.04%

    NA

    237

    94.8%

    Vanguard MSCI Emerging Markets

    VWO

    18.24%

    3.63%

    10.34%

    22,047

    86.76%

    PoweShares FTSE RAFI Emerging Markets

    PXH

    16.61%

    4.99%

    NA

    133

    85.96%

    PowerShares DWA Em Mkts Technical Leaders

    PIE

    19.1%

    -5.04%

    NA

    362

    82.45%

    Schwab Emerging Markets

    SCHE

    17.1%

    NA

    NA

    220

    79.96%

    iShares MSCI Emerging Markets

    EEM

    15.01%

    2.94%

    9.46%

    69,576

    68.53%

     

    In terms five years returns VWO & EEM are the best with returns of 10.34% & 9.46% well above the five year benchmark interest rates. The volumes are also large indicating high levels of liquidity. In term of 1 year returns DEM again VWO are top with returns of 21.48% & 18.24%.

    VWO employs an indexing approach to provide broad exposure to the equity markets of emerging countries mainly Europe, Asia, Africa and Latin America. The median market capitalization is of $ 18 billion. The expense ratio is 0.22% as of 25/02/2011. Please find attached the top ten largest holding as on 28/02/2011. (These holding comprise of 19% of the net assets of the fund.)

    1.        Petroleo Brasileiro SA

    2.        Vale SA

    3.        Samsung Electronics Co Ltd.

    4.        Gazprom OAO

    5.        Taiwan Semiconductor Manufacturing Co Ltd.

    6.        China Mobile Ltd

    7.        America Movil SAB de CV

    8.        Itau Unibanco Holding SA

    9.        Industrial & Commercial Bank of China

    10.    China Construction Bank Corp

    Diversification is always a good strategy but before diversifying we have to consider the risk factors. Investing in Emerging markets can be subject to currency risk in exchange rate and restrictions on the movement of foreign currency. In addition, there may be less governmental supervision and regulations and political instability.

    Despite this, emerging market equities from an important part of a portfolio. Regional diversification provides a hedge against volatility in the USA and other developed markets. This helps with our objective to maximise returns on portfolio while minimizing risk.

    Disclaimer:

    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: DEM, VWO, PXH, PIE, SCHE, EEM

    (NYSE: DEM), (NYSE: VWO), (NYSE: PXH), (NYSE: PIE), (NYSE: SCHE), (NYSE: EEM)


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  • Japan Disaster -- Prevention is Better Than Cure -- How Does that Apply to Investing?

    04/07/2011

    Japan will take many years to reuild the physical and psychological damage caused by the triple disaster that struck them. Who could have known? There is a very important lesson that can easily be overlooked in the rush to stop radioactive leaks and start to rebuild. Like New Orleans where the levies were known to be a problem area, Japan's nuclear reactors were living on borrowed time, having had their life extended -- just another year. The temptation to delay is very seductive until disaster strikes.

    For years, we have put off retirement investments for -- just another year. Many now face and ugly repair crisis as portfolios have been blighted by the financial melt-down and they are left with a hole. The good news is that there are actions you can and must take to repair the damage and make the most of the time you have left.

    Asset allocation is critical in determining risk adjusted returns from your portfolio.To make this clear, we use SIB -- Simpler Is Better -- to show the potential difference in returns between the portfolios with different numbers of asset classes.

    Each of the SIBs are built from one ETF per asset class.

    Asset Class Ticker Name
    LARGE BLEND VTI Vanguard Total Stock Market ETF
    Foreign Large Blend VEU Vanguard FTSE All-World ex-US ETF
    DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
    REAL ESTATE VNQ Vanguard REIT Index ETF
    COMMODITIES BROAD BASKET DBC PowerShares DB Commodity Idx Trking Fund
    Intermediate-Term Bond BND Vanguard Total Bond Market ETF

    So the three asset SIB has (VTI), or (SPY), (VEU) or (EFA) and (BND) or (AGG). The four asset SIB adds emerging markets (EEM) or (VWO). The five asset SIB adds Real Estate (RWR) or (VNQ). The six asset SIB adds commodities (DBC) or (GCC). These are index funds, we are not attempting to pick the best fund for each asset class but to make sure we have each asset class covered.

    The three asset portfolio is old school. The world comprises the US and the rest.

    Four asset classes add emerging markets which provides an equities asset class that behaves differently from US and international.

    Five asset classes provides real estate trusts which moves away from equities and provides an asset that delivers dividends and is uncorrelated.

    Six asset classes provides commodities which is a great hedge against inflation and also times of international stress when equities can drop sharply.

    Let's now look at five year returns for each portfolio and what that would mean if these returns were applied over a decade in terms of additional money in your portfolio.

     

     


    Unfortunately, most portfolios in retirement plans only support three asset classes. In a study of over 800 mainly retirement plans, we noted that the majority of plans supported only three asset classes which is going to have a significant impact on the potential returns for the participant.


    How can you leverage the benefits of six asset classes if your plan only supports three asset classes? If you have an IRA, overweight the missing asset class (or more) in the IRA to compensate and create a more balanced portfolio that can deliver higher returns and lower risk.

    Prevention is better than cure, which we all know. Just don't leave it -- one more year -- until you get started.


    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:SSPY, VTI, EFA, VEU, AGG, BND, CIU, BIV, GWL, PFA, IVV, IYY, IWV, VV, DLN, RSP, SCHX, EEM, VWO, GMM, PXH, DEM, SCHE, DBC, GCC

    Exchange Tickers: (SPY), (VTI), (EFA), (VEU), (AGG), (BND), (CIU), (BIV), (GWL), (PFA), (IVV), (IYY), (IWV), (VV), (DLN), (RSP), (SCHX), (EEM), (VWO), (GMM), (PXH), (DEM), (SCHE), (DBC), (GCC)



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  • Will We Learn From Japan's Triple Tragedy?

    04/07/2011

    While the disaster in Japan will take many years to be put right, there is a very important lesson that can easily be overlooked in the rush to stop radioactive leaks and repair the damage. Like New Orleans where the levies were known to be a problem area, Japan's nuclear reactors were living on borrowed time, having had their life extended -- just another year. The temptation to delay until next time is very seductive until disaster strikes and the cost to repair dwarfs the cost to prevent.

    For many years we have put off focusing on our retirement investment for -- just another year. Many are facing the repair crisis as their portfolios have been blighted by the recent financial melt-down and they are left with a hole that they have to fill somehow. The good news is that there are actions you can and must take to repair the damage and make the most of the time you have left.

    In a series of articles, we are going back to basics. Asset allocation is critical in determining the risk adjusted returns from your portfolio.To make this clear, we are going to use a simple benchmark vehicle -- SIB -- Simpler Is Better to show the potential difference in returns between the portfolios with different numbers of asset classes.

    Each of the SIBs are built from one ETF per asset class. The ETFs we selected for these portfolios are as follows:

    Asset Class Ticker Name
    LARGE BLEND VTI Vanguard Total Stock Market ETF
    Foreign Large Blend VEU Vanguard FTSE All-World ex-US ETF
    DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
    REAL ESTATE VNQ Vanguard REIT Index ETF
    COMMODITIES BROAD BASKET DBC PowerShares DB Commodity Idx Trking Fund
    Intermediate-Term Bond BND Vanguard Total Bond Market ETF

    So the three asset SIB has (VTI), or (SPY), (VEU) or (EFA) and (BND) or (AGG). The four asset SIB adds emerging markets (EEM) or (VWO). The five asset SIB adds Real Estate (RWR) or (VNQ). The six asset SIB adds commodities (DBC) or (GCC). These are index funds, we are not attempting to pick the best fund for each asset class but to make sure we have each asset class covered.

    The three asset portfolio is old school. The world comprises the US and the rest. US equities are enough of a microcosm that I can find enough diversification to give me protection against certain segments of the markets declining. Even if that does happen, I have fixed income and international equities to bail me out. We know that this is no longer the case. We can see on our browsers how the DOW, FTSE and NIKKEI act as if they are the same index, just on a different timezone. With a three asset portfolio, you really have very limited diversification.

    Unfortunately, most of the portfolios in retirement plans only support three asset classes. In a study of over 800 mainly retirement plans, we noted that the majority of plans supported only three asset classes which is going to have a significant impact on the potential returns for the participant.


    We use Strategic Asset and Tactical Asset allocation investment strategies to compare returns.

    Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
    Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate 1% 30% 2% 31% 4% 35%
    Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate 15% 129% 3% 15% 4% 18%

    Over a five year period, you will see five year returns are 4% for either strategy. This is what you might be getting from your retirement portfolio, and you can do better.

    Adding emerging markets does give you a completely different asset

     

    The list of minor asset classes covered by Three Core Asset ETF Benchmark The list of minor asset classes covered by Four Core Asset ETF (EM) Benchmark
    Foreign Large Blend: VEU
    Intermediate-term Bond: BND
    Large Blend: VTI
    Diversified Emerging Mkts: VWO
    Foreign Large Blend: VEU
    Intermediate-term Bond: BND
    Large Blend: VTI

     

    Asset Class Three Core Asset ETF Benchmark Four Core Asset ETF (EM) Benchmark
    Fixed Income 1 1
    Foreign Equity 1 1
    Emerging Market Equity 0 1
    US Equity 1 1
    Total 3 4

     

    As of Apr 6, 2011, Three Core Asset ETF Benchmark investment choice is rated as below average and Four Core Asset ETF (EM) Benchmark 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 Three Core Asset ETF Benchmark Four Core Asset ETF (EM) Benchmark
    Diversification poor (2%) poor (8%)
    Fund Quality below average (23%) average (39%)
    Portfolio Building poor (6%) below average (16%)
    Overall Rating below average (10%) below average (20%)

     

    Performance chart (as of Apr 6, 2011)

    Performance table (as of Apr 6, 2011)

     

    We note that applying a tactical asset allocation strategy with three asset classes and funds is of limited value. Tactical asset allocation relies on having other asset classes that are not correlated so that when one asset class is under performing, another one becomes a hedge and rises to compensate. However, with an additional asset class, you are able to double returns over the longer time horizon. Note that an extra 1% a year over a decade puts 10% more money in your portfolio (SAA to SAA) and 4% a year over a decade puts 50% more money in your portfolios (TAA to TAA)

    Emerging markets are going to play a larger and larger part in our lives as countries such as China and India are increasingly powerful. We have already seen how these nations have sprung back from the great recession and are leading the recovery. This is an important part of any portfolio and if you want to know how to better your chances of a better retirement, now you know.

    How can  you do this if your plan only supports three asset classes? If you have an IRA, overweight the missing asset class (or two) in the IRA to compensate and create a more balanced portfolio that can deliver higher returns and lower risk.

    Prevention is better than cure, which we all know. Just don't leave it -- one more year -- until you get started.


    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: SPY, VTI, EFA, VEU, AGG, BND, CIU, BIV, GWL, PFA, IVV, IYY, IWV, VV, DLN, RSP, SCHX, EEM, VWO, GMM, PXH, DEM, SCHE

    Exchange Tickers: (SPY), (VTI), (EFA), (VEU), (AGG), (BND), (CIU), (BIV), (GWL), (PFA), (IVV), (IYY), (IWV), (VV), (DLN), (RSP), (SCHX), (EEM), (VWO), (GMM), (PXH), (DEM), (SCHE)


     

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  • 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.

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First   1   Last  

  • Apache Design Solutions 401K Report On 12/03/2010

    12/03/2010

    This report reviews Apache Design Solutions 401K 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 Apache Design Solutions 401K can achieve reasonable investment results using asset allocation strategies.

    Plan Review and Rating

     

    Apache Design Solutions 401K's 401K plan consists of 42 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income. The list of minor asset classes covered:

    Conservative Allocation: AOK
    Diversified Emerging Mkts: EEM, GMM, PXH, DEM, SCHE
    Foreign Large Blend: EFA, VEU, GWL, PFA
    Foreign Small/mid Growth: IFSM, VSS, SCHC
    Health: IYH, IXJ, VHT, XBI, PBE, DBR, RYH
    Intermediate Government: IEI, VGIT, ITE
    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 Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
    Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
    Moderate Allocation: AOM
    Natural Resources: IYM, IGE, VAW, XLB, XME, PYZ, DBN, RTM, UYM
    Real Estate: IYR, ICF, VNQ
    Retirement Income:
    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
    Target Date 2016-2020: TZG
    Target Date 2026-2030: TZL
    Target Date 2036-2040: TZV
    World Stock: IOO, VT

    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 (85%)
    Fund Quality -- Rated as (18%)
    Portfolio Building -- Rated as (79%)
    Overall Rating: (62%)

    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 Apache Design Solutions 401K).

    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 5 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)
    REITs: (IYR or VNQ or ICF)
    Fixed Income: (AGG or BND)

    Performance chart (as of Dec 2, 2010)

    Performance table (as of Dec 2, 2010)

    Currently, asset classes in US Equity (SPY,VTI) and Emerging Market Equity (EEM,VWO) are doing relatively well. These asset classes are available to Apache Design Solutions 401K participants.

    To summarize, Apache Design Solutions 401K plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

    Symbols: APA , SPY , VTI , EFA , VEU , EEM , VWO , IYR , VNQ , ICF , AGG , BND , AOM , AOK , CIU , BIV , IYH , IXJ , VHT , XBI , PBE , DBR , RYH , IYM , IGE , VAW , XLB , XME , PYZ , DBN , RTM , UYM , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , TZG , TZL , TZV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IOO , VT , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJJ , IWS , JKI , VOE , EMV , PWP , RFV , UVU , 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 , IEI , VGIT , ITE , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK

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