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.

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:

Performance chart (as of Apr 18, 2011)

Performance table (as of Apr 18, 2011)

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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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.

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:

Performance chart (as of Apr 18, 2011)

Performance table (as of Apr 18, 2011)

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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06/13/2011

Retirement investing is a long term process. This report reviews Oracle Corporation 401(k) Savings and Investment 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 investors in Oracle Corporation 401(k) Savings and Investment Plan can achieve reasonable investment results using asset allocation strategies.

Plan Review and Rating

Oracle Corporation 401(k) Savings and Investment Plan consists of 30 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income.

The plan has many high quality funds including Dodge & Cox stock (DODGX), Fidelity Contra (FCNTX), Lazard Emerign Markets (LZEMX), Fidelity Low Priced Stocks (FLPKX). Additionaly, Pimco's total return bond fund (PTTRX), managed by Bill Gross gives participants a solid choice in fixed income.

As of Jun 10, 2011, this plan investment choice is rated as above average 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 average (52%)
Fund Quality -- Rated as above average (75%)
Portfolio Building -- Rated as great (92%)
Overall Rating: above average (75%)

Current Economic and Market Conditions

Last week marked the sixth week of losses in the U.S. stock market. Investors are now clearly in a risk off mode. Key observations include

• U.S. stock market index (Vanguard Total Stock Market Index (VTI)), for example, is now ranked below U.S. 7-10 long term treasury bonds (IEF) and just a notch above credit bond index (CFT) in our major trend table. 
• For the time being, commodities (DBC) and Gold (GLD) are still holding first places, with international REITs (RWX) is still strong. 
• On the fixed income side, long bonds (TLT) (LQD) are now trending higher while emerging market bonds (PCY) is still holding a higher place. 

This shows investors' strong risk aversion but it is still not water shed flight to safety moment yet.

For more information on how these assets are ranked, please see here. 

The following lists how major assets are ranked.

Major Asset Classes Trend

06/10/2011

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 Jun 10, 2011)

Performance table (as of Jun 10, 2011)

From the above table, one can see that Oracle's plan does deliver extra returns over the simple four core asset ETF portfolios. It shows high quality funds can indeed add value.

To summarize, investors adopting Oracle Corporation 401(k) Savings and Investment Plan plan can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

Symbols: ORCL, VTI, VEU, VWO, BND,  FLPKX, DODGX,  FCNKX,LZEMX, PTTRX

Exchange Tickers: (ORCL),  (VTI), (VEU), (VWO), (BND), (VTIVX), (VFORX), (VTTHX), (VTHRX), (VTTVX), (VTWNX), (VTXVX), (VTENX), (VTOVX), (VTINX), (VFIFX), (FSIIX), (VIEIX), (VIIIX), (VBMPX), (FLPKX), (DODGX), (FGCKX), (FCNKX), (FWWFX), (DODFX), (ARTKX), (ARTVX), (LZEMX), (JMVAX), (TCMMX), (FBAKX), (PTTRX)

06/22/2011