This article is part of a series of case studies we are conducting for various 401K plans. In this article, we will discuss how participants in Sprint Nextel 401K Plan can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today’s market environment.
Sprint Nextel 401K Plan's 401K plan consists of 29 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income. Four Core Asset ETF (EM) Benchmark's 401K plan consists of funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income.
| The list of minor asset classes covered by Sprint Nextel 401K Plan | The list of minor asset classes covered by Four Core Asset ETF (EM) Benchmark |
|---|---|
|
Diversified Emerging Mkts:
EEM,
GMM,
PXH,
DEM,
SCHE
Equity: VTI, VT Foreign Large Blend: EFA, VEU, GWL, PFA High Yield Bond: HYG, JNK, PHB 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 Multisector Bond: AGG, GBF, BND, LAG Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA Small Value: IJS, IWN, JKL, VBR, DSV, PWY, RZV, UVT World Bond: IGOV, BWX, WIP World Stock: IOO, VT |
| Asset Class | Sprint Nextel 401K Plan | Four Core Asset ETF (EM) Benchmark | ||
|---|---|---|---|---|
| Total | 29 |
As of Mar 18, 2011, Sprint Nextel 401K Plan investment choice is rated as and Four Core Asset ETF (EM) Benchmark investment choice is rated as 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 | Sprint Nextel 401K Plan | Four Core Asset ETF (EM) Benchmark | ||
|---|---|---|---|---|
| Diversification | ||||
| Fund Quality | ||||
| Portfolio Building | ||||
| Overall Rating |
The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies (SAA and TAA , both provided by MyPlanIQ). 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 Mar 18, 2011)
Performance table (as of Mar 18, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Sprint Nextel 401K Plan Tactical Asset Allocation Moderate | 2% | 19% | 10% | 79% | 11% | 70% |
| Sprint Nextel 401K Plan Strategic Asset Allocation Moderate | 10% | 92% | 3% | 17% | 5% | 24% |
| Four Core Asset ETF (EM) Benchmark Tactical Asset Allocation Moderate | -2% | -16% | 5% | 46% | 8% | 51% |
| Four Core Asset ETF (EM) Benchmark Strategic Asset Allocation Moderate | 10% | 66% | 3% | 11% | 5% | 18% |
Currently are doing well. But these asset classes are not available to Sprint Nextel 401K Plan participants.
To summarize, Sprint Nextel 401K Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Currently, the tactical asset allocation strategy indicates overweighing on
US Equity, Foreign Equity
and Fixed Income
funds.
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: S, SPY, VTI, EFA, VEU, EEM, VWO, AGG, BND, VT, HYG, JNK, PHB, CIU, BIV, GWL, PFA, IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV, IGOV, BWX, WIP, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IOO, IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG, 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, IJK, IWP, VOT, EMG, PWJ, RFG, UKW