 |
Vanguard ETF: |  |
7.4%* |
|
Diversified Core: | |
8.1%* |
|
Six Core Asset ETFs: | |
7.3%* |
Articles on SHV
- Appetite for US High Yield Bonds Remains High as Yields Tighten
05/11/2011
High yield bond ETFs concentrate on lower quality corporate bonds, which are considered riskier than higher-quality or more established companies. Because of this higher level of risk, high-yield bonds, also known as junk bonds, offer higher yields to investors. US high yield bond ETFs invest at least 65% of capital in binds that are not rated or are rated by S&P or Moody's at or below BB (considered speculative). Because of high returns and the potential for diversification across many markets, regions, and industries, high yield bonds are a major part of many investment strategies.
Trend score is the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).Assets Class Symbols 05/06
Trend
Score04/29
Trend
ScoreDirection International Inflation Protected WIP 6.74% 9.22% v High Yield JNK 5.54% 5.68% v International Treasury BWX 5.1% 6.82% v Long Term Credit LQD 3.48% 2.87% ^ Emerging Mkt Bonds PCY 3.48% 2.21% ^ 20+ Year Treasury TLT 3.38% 1.63% ^ Inflation Protected TIP 3.09% 3.27% v 10-20Year Treasury TLH 2.88% 1.73% ^ Intermediate Term Credit CIU 2.43% 2.06% ^ Intermediate Treasury IEF 2.39% 1.65% ^ US Total Bond BND 2.1% 1.77% ^ MBS Bond MBB 1.92% 1.83% ^ California Muni CMF 1.74% 1.99% v National Muni MUB 1.57% 1.24% ^ Short Term Credit CSJ 1.0% 1.09% v New York Muni NYF 0.64% 0.51% ^ Short Term Treasury SHY 0.55% 0.53% ^ Treasury Bills SHV 0.08% 0.07% ^
You can get a no cost widget for any of these tables which will automatically update weekly.At the end of last week (5/6/2011), high yield bond ETFs, represented by the SPDR Barclays Capital High Yield (JNK), stood among the top of the Fixed Income Return Table. Yields in the sector have declined as risk premiums have tightend on stronger performance by companies with lower credit ratings. While returns on corporate bonds have declined slightly in recent periods, ETFs that track the market have continually offered strong returns relative to other fixed income securities.U.S. High Yield Bonds
05/06/2011Description Symbol 1 Yr 3 Yr 5 Yr Avg. Volume(K) 1 Yr Sharpe iShares iBoxx $ High Yield Corp HYG 17.67% 7.03% NA 1,247 270.24% SPDR Barclays Capital High Yield JNK 20.83% 8.41% NA 2,972 279.79% PowerShares Fundamental High Yield PHB 19.2% 0.79% NA 302 318.25% Among US High Yield Bond ETFs, the top performers include the SPDR Barclays Capital High Yield (JNK), the Powershares Fundamental High Yield ETF (PHB), and the iShares iBoxx $ High Yield Corporate ETF (HYG) returning 20.83%, 19.20%, 17.67% respectively in the past year.With the highest one-year return and the highest trading volume, the SPDR Barclays Capital High Yield ETF remains a srtong investment option. The ETF is well diversified, with no single bond comprising more than 4% of total assets and the top 10% of assets making up only 22.58% of the total.Going forward, yields on high yield corporate debt should continue to tighten as long as companies continue to generate strong performance. Still, high yield corporate bond ETFs should continue to offer attractive returns relative to other fixed income assets.Corporate bonds are an important component of diversified bond portfolios, as they offer greater returns and risks than government bonds. Due to their high level of interest paid, generally in the form of monthly distributions, corporate bond ETFs may be especially suitable for individuals approaching or already in retirement. As with any investment, it is important to make sure the risk and return levels match up with your personal investment goals.Symbols: AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB
Tickers: (NYSE: AGG), (NYSE: BND), (NYSE: SHV), (NYSE: SHY), (NYSE: IEF), (NYSE: TLH), (NYSE: TLT), (NYSE: TIP), (NYSE: WIP), (NYSE: HYG), (NYSE: JNK), (NYSE: PHB), (NYSE: CSJ), (NYSE: CIU), (NYSE: LQD), (NYSE: BWX), (NYSE: CMF), (NYSE: NYF), (NYSE: MUB), (NYSE: MBB), (NYSE: PCY), (NYSE: EMB)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. - JNK Beats WIP At the Top of The Fixed Income Table
05/10/2011
In order to reach your financial objectives, you must diversify. There are a range of investment alternatives that vary greatly in the degree and type of risk and potential return. The key to developing a sound portfolio is to strike the right balance between potential reward and risk, based on your financial objectives, financial situation and investment style.
Fixed Income refers to assets that provide their owners with a fixed stream of income. Fixed income assets can be broken down into five sub-classes:
- Government-issued securities
- Corporate-issued securities
- Inflation-protected securities (IPS)
- Mortgage-backed securities (MBS)
- Asset-backed securities (ABS)
An enormous amount of innovation continues within the world of fixed income. For the retail investor, IPS, MBS, and ABS are all relatively new additions. The U.S. leads the world in the range and depth of fixed-income offerings--particularly with MBS and ABS. Other countries are developing their MBS and ABS markets.
Although the fixed income stream ETFs provide the best hedge against equity volatility, the returns are not high as equity and other assets. WIP, JNK & BWX are the best performers in terms of returns but the last week showed a decline.
There is a mixed trend within the fixed asset type ETFs but overall more sub-classes are up than down. We are expecting a shift in ETF’s towards international fixed income as the dollar weakens and interest rates are raised overseas
WIP fund total Net assets value is 1.362 billion with a one year return of 16.95% and a three year return is of 4.01%. The gross expense ratio is 0.50%. The total sector allocation is broken down into the following composition: Treasury 99.83% & Cash 0.16%.
JNK fund total Net assets value is 7.3 billion with a one year return of 12.82% and a three year return is of 8.21%. The gross expense ratio is 0.40% for the sector allocations please see the graph below:
Although the one year returns of WIP i.e. 16.95% are greater than JNK i.e. 12.82%, we prefer the longevity from JNK i.e. 8.21% within the 3 years double the time of WIP return and it is performing well in the short term too.
We track asset class movement and you can see here the fixed income table which is updated weekly.
Assets Class
Symbols
05/06
Trend
Score04/29
Trend
ScoreDirection
International Inflation Protected
WIP
6.74%
9.22%
v
High Yield
JNK
5.54%
5.68%
v
International Treasury
BWX
5.1%
6.82%
v
Long Term Credit
LQD
3.48%
2.87%
^
Emerging Mkt Bonds
PCY
3.48%
2.21%
^
20+ Year Treasury
TLT
3.38%
1.63%
^
Inflation Protected
TIP
3.09%
3.27%
v
10-20Year Treasury
TLH
2.88%
1.73%
^
Intermediate Term Credit
CIU
2.43%
2.06%
^
Intermediate Treasury
IEF
2.39%
1.65%
^
US Total Bond
BND
2.1%
1.77%
^
MBS Bond
MBB
1.92%
1.83%
^
California Muni
CMF
1.74%
1.99%
v
National Muni
MUB
1.57%
1.24%
^
Short Term Credit
CSJ
1.0%
1.09%
v
New York Muni
NYF
0.64%
0.51%
^
Short Term Treasury
SHY
0.55%
0.53%
^
Treasury Bills
SHV
0.08%
0.07%
^
Trend score is the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).
You can get a no cost widget for any of these tables which will automatically update weekly.If you are planning to shift part of your portfolio into fixed-income investments to help manage risk, you may also want to consider "laddering" these securities. This means you spread the total dollar amount of your investment among fixed-income securities with different maturities.
Symbols: AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB
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.
- How Are Morningstar's Best Bond Fund Managers Faring in These Trying Times
04/29/2011
Many working people put off their retirement investing -- just one more year until it has becomes a "hair on fire" problem. The problem is that we can easily be overwhelmed and shut down. The way to solve this is to focus on what works in the long term -- that is what long term investing is all about -- and allow that to filter out what may work in the short term but won't stand the test of time.
We continue to examine different portfolios to see what we can learn and use to further our investment portfolios.
This article reviews the best of bond strategy that we first published in November of last year. This outlined a strategy based on bond funds only It was simple: out of the seven top bond managers (according to Morningstar) own the top performing bond fund which you review on a monthly basis (or quarterly if you prefer). Every year we review the list of top performers and you update your list of funds to maintain only the top performers in your list. We will call this Best of Bonds (BoB).Currently, the top seven we use are:
Bond Fund
Ticker
PIMCO Total Return
TCW Total Return Bond
Western Asset Core Bond
Metropolitan West Total Return Bond
Loomis Sayles Bond
Dodge & Cox Income
FPA New Income
In a previous set of articles we tried to compete using bind ETFs such as BND, BWX, CIU, CMF, CSJ, IEF, JNK, LQD, MBB, MUB, NYF, PCY, SHV, SHY, TIP, TLH, TLT, WIP but we were unable match the returns of these managed bond funds. With PIMCO recently announcing a managed ETF bond fund, it will be interesting to see whether this gap will be filled.
We compare this against a portfolio of dividend bearing ETF's that we have reviewed and use as a recommended plan for those looking to invest for income.
Bonds have had a torrid time since the turn of the year with many tactical strategies moving to cash rather than staying in bond funds. With interest rates sticking to their lows and with QEII still in operation, there has been little joy for bond owners.
The comparison is
- Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year`s Funds Monthly
- Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year Quarterly
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe P Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year Quarterly 5% 85% 11% 194% 10% 164% P Bond Funds Momentum Based on Upgrading Fixed Income Managers of the Year`s Funds Monthly 6% 110% 12% 219% 11% 172% Retirement Income ETFs Strategic Asset Allocation Moderate 13% 96% 4% 16% 5% 23% Retirement Income ETFs Tactical Asset Allocation Moderate 7% 52% 10% 76% 10% 66%
Full details with drawdown and other parameters -- you can also add other portfolios for comparison
Three Month Chart (Blue is Quarterly)
One Year Chart (Blue is Quarterly)
Three Year Chart (Blue is Quarterly)
Five Year Chart (Blue is Quarterly)
Takeaways- Despite the challenging conditions, the Bond funds continue to deliver reasonable results in the short term and still look good over the longer time horizon
- The retirement income ETF tactical asset allocation has a similar long term performance but with more trading activity
- The strategic asset allocation has been doing well in the short term but suffered in the big downturn
The best of bonds is still a solid approach and with the advent of managed bond ETFs, it may be possible to have an ETF equivalent plan.
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: PTTRX, TGLMX, WATFX, MWTRX, LSBDX, DODIX, FPNIX, BND, BWX, CIU, CMF, CSJ, IEF, JNK, LQD, MBB, MUB, NYF, PCY, SHV, SHY, TIP, TLH, TLT, WIP - US Total Bonds (BND): PowerShares CEF Income Composite shows good Performance
04/20/2011
Setting targets for your retirement nestegg must be evaluated based on the risks and the returns of the portfolio. The type of lifestyle achieved in retirement depends on decisions taken today.Bonds provide low risk, predictable income and are a key part of a portfolio. They are an investment with low risk and constant payments. In a previous article we outlined the types of credit risk that are possible for these types of investments.
All bonds are under pressure and the US total Bond market is in the lower half of the table as interest rates domestically are being kept low by the Fed.
Major Asset Classes Trend
04/15/2011
Description
Symbol
1 Week
4 Weeks
13 Weeks
26 Weeks
52 Weeks
Trend Score
Treasury Bills
0.01%
0.01%
0.06%
0.05%
0.12%
0.05%
Emerging Mkt Bonds
-0.45%
0.53%
0.47%
-4.3%
6.52%
0.55%
Frontier Market Stks
-1.63%
6.32%
-7.13%
-5.77%
11.34%
0.63%
Intermediate Treasuries
1.49%
-0.85%
-0.01%
-4.26%
6.86%
0.64%
Municipal Bonds
0.84%
0.45%
5.25%
-3.69%
0.57%
0.68%
Mortgage Back Bonds
0.71%
-0.1%
0.54%
-0.01%
3.92%
1.01%
Total US Bonds
0.82%
-0.26%
0.77%
-0.44%
5.01%
1.18%
US Credit Bonds
0.98%
-0.02%
1.32%
-0.21%
6.11%
1.63%
International Treasury Bonds
0.93%
0.07%
4.49%
-0.04%
10.44%
3.18%
International Developed Stks
-0.54%
5.23%
2.52%
6.94%
8.47%
4.53%
US High Yield Bonds
-0.05%
1.28%
2.68%
8.69%
14.88%
5.49%
International REITs
-0.1%
4.52%
1.25%
4.62%
21.16%
6.29%
Emerging Market Stks
-1.63%
8.33%
2.25%
6.58%
18.78%
6.86%
US Stocks
-0.61%
3.65%
2.9%
15.79%
15.39%
7.42%
US Equity REITs
2.49%
3.99%
6.7%
10.41%
23.94%
9.5%
Gold
0.97%
4.83%
9.31%
8.51%
30.39%
10.8%
Commodities
-2.35%
4.88%
11.24%
24.98%
28.54%
13.46%
In the very short term (1 week) US Bonds ended below other Fixed Income Investments, such as the Treasury Bills (SHV), which is short term focused (maturity less than a year), but Above Municipal Bonds (MUB) and International Treasury Bonds (BWX).
PowerShares CEF Income Composite (PCEF) is a diversified portfolio which includes mostly Bonds (44%), followed by High Yield Bonds (20%) and Options (36%). This provides low risk with a high one year return.
U.S. Total Bonds
04/08/2011
Description
Symbol
1 Yr
3 Yr
5 Yr
Avg. Volume(K)
1 Yr Sharpe
PowerShares CEF Income Composi
6.21%
NA
NA
57
55.92%
Vanguard Intermediate-Term Bon
4.07%
1.7%
NA
129
71.62%
iShares Barclays Aggregate Bon
3.73%
4.49%
5.52%
715
114.39%
Vanguard Total Bond Market ETF
3.03%
1.62%
NA
805
92.35%
Vanguard Intermediate-Term Bond (BIV) is, as its name suggests, a safer Bond in the Medium Term, with lower returns. In other words, a less risky portfolio, that comes with lower returns, composing the investments in 50% of the assets in Corporate Bonds and the other half in US Government Bonds.
BIV can be a good choice taking into account the maturity of the asset and that the risks of the investments can be due to significant changes on interest rate.
iShares Barclays Aggregate Bond (AGG) has a longer performance history. Despite lower 1 year returns, the 3 and 5 year returns are strong which translates into a good price/yield ratio.
Finally, Vanguard’s Total Bond Market ETF (BND), shows a lower one year returns, but showing longer history (3 years), and good volume. It is an ETF based on high quality, medium Weighted Maturity.
US Total Bonds deserve consideration for a diversified Portfolio for medium to long term objectives, linked with consistent returns.
Today Bonds are under pressure with many momentum strategies preferring cash. However, in the long term, a well thought out bond strategy is a critical piece of the retirement portfolio. PCEF delivers strong one year returns but is very new. Having AGG as the safe, proven alternative makes sense.
Symbols: CEF, BND, SHV, MUB, BWX, PCEF, BIV, AGG, Exchange, Tickers, (NYSE: CEF), (NYSE: BND), (NYSE: SHV), (NYSE: MUB), (NYSE: BWX), (NYSE: PCEF), (NYSE: BIV), (NYSE: AGG)
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.
- US Total Bonds (BND): PowerShares CEF Income Composite shows good Performance
04/20/2011
Setting targets for your retirement nestegg must be evaluated based on the risks and the returns of the portfolio. The type of lifestyle achieved in retirement depends on decisions taken today.Bonds provide low risk, predictable income and are a key part of a portfolio. They are an investment with low risk and constant payments. In a previous article we outlined the types of credit risk that are possible for these types of investments.
All bonds are under pressure and the US total Bond market is in the lower half of the table as interest rates domestically are being kept low by the Fed.
Major Asset Classes Trend
04/15/2011
Description
Symbol
1 Week
4 Weeks
13 Weeks
26 Weeks
52 Weeks
Trend Score
Treasury Bills
0.01%
0.01%
0.06%
0.05%
0.12%
0.05%
Emerging Mkt Bonds
-0.45%
0.53%
0.47%
-4.3%
6.52%
0.55%
Frontier Market Stks
-1.63%
6.32%
-7.13%
-5.77%
11.34%
0.63%
Intermediate Treasuries
1.49%
-0.85%
-0.01%
-4.26%
6.86%
0.64%
Municipal Bonds
0.84%
0.45%
5.25%
-3.69%
0.57%
0.68%
Mortgage Back Bonds
0.71%
-0.1%
0.54%
-0.01%
3.92%
1.01%
Total US Bonds
0.82%
-0.26%
0.77%
-0.44%
5.01%
1.18%
US Credit Bonds
0.98%
-0.02%
1.32%
-0.21%
6.11%
1.63%
International Treasury Bonds
0.93%
0.07%
4.49%
-0.04%
10.44%
3.18%
International Developed Stks
-0.54%
5.23%
2.52%
6.94%
8.47%
4.53%
US High Yield Bonds
-0.05%
1.28%
2.68%
8.69%
14.88%
5.49%
International REITs
-0.1%
4.52%
1.25%
4.62%
21.16%
6.29%
Emerging Market Stks
-1.63%
8.33%
2.25%
6.58%
18.78%
6.86%
US Stocks
-0.61%
3.65%
2.9%
15.79%
15.39%
7.42%
US Equity REITs
2.49%
3.99%
6.7%
10.41%
23.94%
9.5%
Gold
0.97%
4.83%
9.31%
8.51%
30.39%
10.8%
Commodities
-2.35%
4.88%
11.24%
24.98%
28.54%
13.46%
In the very short term (1 week) US Bonds ended below other Fixed Income Investments, such as the Treasury Bills (SHV), which is short term focused (maturity less than a year), but Above Municipal Bonds (MUB) and International Treasury Bonds (BWX).
PowerShares CEF Income Composite (PCEF) is a diversified portfolio which includes mostly Bonds (44%), followed by High Yield Bonds (20%) and Options (36%). This provides low risk with a high one year return.
U.S. Total Bonds
04/08/2011
Description
Symbol
1 Yr
3 Yr
5 Yr
Avg. Volume(K)
1 Yr Sharpe
PowerShares CEF Income Composi
6.21%
NA
NA
57
55.92%
Vanguard Intermediate-Term Bon
4.07%
1.7%
NA
129
71.62%
iShares Barclays Aggregate Bon
3.73%
4.49%
5.52%
715
114.39%
Vanguard Total Bond Market ETF
3.03%
1.62%
NA
805
92.35%
Vanguard Intermediate-Term Bond (BIV) is, as its name suggests, a safer Bond in the Medium Term, with lower returns. In other words, a less risky portfolio, that comes with lower returns, composing the investments in 50% of the assets in Corporate Bonds and the other half in US Government Bonds.
BIV can be a good choice taking into account the maturity of the asset and that the risks of the investments can be due to significant changes on interest rate.
iShares Barclays Aggregate Bond (AGG) has a longer performance history. Despite lower 1 year returns, the 3 and 5 year returns are strong which translates into a good price/yield ratio.
Finally, Vanguard’s Total Bond Market ETF (BND), shows a lower one year returns, but showing longer history (3 years), and good volume. It is an ETF based on high quality, medium Weighted Maturity.
US Total Bonds deserve consideration for a diversified Portfolio for medium to long term objectives, linked with consistent returns.
Today Bonds are under pressure with many momentum strategies preferring cash. However, in the long term, a well thought out bond strategy is a critical piece of the retirement portfolio. PCEF delivers strong one year returns but is very new. Having AGG as the safe, proven alternative makes sense.
Symbols: CEF, BND, SHV, MUB, BWX, PCEF, BIV, AGG, Exchange, Tickers, (NYSE: CEF), (NYSE: BND), (NYSE: SHV), (NYSE: MUB), (NYSE: BWX), (NYSE: PCEF), (NYSE: BIV), (NYSE: AGG)
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.
- Schwab Mutual Funds Beat out ETFs
04/06/2011
- Schwab Select ETF Plan Has Bright Prospects
04/06/2011
- Smart U.S. Money Managers Dumped Long Term Treasury Bonds, Who Are Holding The Bag?
04/04/2011
- MidAmerican Energy Company's 401K Plan: More Diversification Needed
03/31/2011
- Commodities Withstood the Recent Market Selloff
03/21/2011
- Earthquakes and Wars Call for Diversification and Tactical Asset Allocation in Investing
03/20/2011
- 'Safe' Assets' Trends Back to Positive: Risk Aversion Began?
03/14/2011
- Major Assets: Risk Assets Strong While Safe Assets Have Negative Trends
03/07/2011
- Commodities Showed Their Hedge Amid Equity Weakness
02/28/2011
- Shell Versus Morningstar -- More is Better
02/27/2011
- Energy Commodities and Gold Strong: Gold's Role in Asset Allocation
02/26/2011
- Major Asset Trends: U.S. Stocks and REITs Strong, International Bonds Worth Considering
02/22/2011
- Commodity ETF Trends: Silver Breaks Out, Gold Steady Amid Commodity Strength
02/20/2011
- E-Trade ETF Plan Hits Most of the High Notes
02/16/2011
- Major Asset Trends: Divergence of U.S. Stocks and Emerging Market Stocks Continues
02/14/2011
- ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Report On 12/03/2010
12/03/2010
This report reviews ALLERGAN, INC. SAVINGS AND INVESTMENT 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 ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN can achieve reasonable investment results using asset allocation strategies.
Plan Review and Rating
ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN's 401K plan consists of 13 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:
Foreign Large Blend: EFA, VEU, GWL, PFA
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
Moderate Allocation: AOM
Short Government: SHY, SHV, VGSH, PLK, USY
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
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 (21%)
Fund Quality -- Rated as (16%)
Portfolio Building -- Rated as (31%)
Overall Rating: (24%)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 ALLERGAN, INC. SAVINGS AND INVESTMENT 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 ETFs equivalent:
US Equity: (SPY or VTI)
Foreign Equity: (EFA or VEU)
Fixed Income: (AGG or BND)
Performance chart (as of Dec 2, 2010)Performance table (as of Dec 2, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Tactical Asset Allocation Moderate 7% 61% 6% 65% 7% 69% ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Strategic Asset Allocation Moderate 12% 118% 2% 8% 5% 29% Three Core Asset ETF Index Funds Tactical Asset Allocation Moderate -4% -35% 1% 9% 4% 27% Three Core Asset ETF Index Funds Strategic Asset Allocation Moderate 9% 60% -0% -3% 4% 13% Currently, asset classes in US Equity (SPY,VTI), Foreign Equity (EFA,VEU) and Fixed Income (AGG,BND) are doing relatively well. These asset classes are available to ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN participants.
To summarize, ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: AGN , SPY , VTI , EFA , VEU , AGG , BND , AOM , CIU , BIV , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IOO , VT , SHY , SHV , VGSH , PLK , USY , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJS , IWN , JKL , VBR , DSV , PWY , RZV , UVT , IJR , IWM , JKJ , VB , DSC , PJM , DES , SAA , UWM , SCHA , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK
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