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 Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today’s market environment.
Tiffany & Co., through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry. Its jewelry products include gemstone jewelry, gemstone band rings, diamond rings, wedding bands for brides and grooms, non-gemstone, gold or platinum jewelry, and sterling silver jewelry.
Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan's 401K plan consists of 16 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. Three Core Asset ETF Benchmark's 401K plan consists of 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 by Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan | The list of minor asset classes covered by Three Core Asset ETF Benchmark |
|---|---|
|
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 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 Target Date 2011-2015: TZE Target Date 2016-2020: TZG Target Date 2026-2030: TZL Target Date 2036-2040: TZV World Stock: IOO, VT |
| Asset Class | Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan | Three Core Asset ETF Benchmark | ||
|---|---|---|---|---|
| Total | 16 |
As of Mar 18, 2011, Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan investment choice is rated as below average and Three Core Asset ETF 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 | Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan | Three Core Asset ETF Benchmark | ||
|---|---|---|---|---|
| Diversification | average (61%) | |||
| Fund Quality | poor (9%) | |||
| Portfolio Building | below average (20%) | |||
| Overall Rating | below average (29%) |
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 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 Mar 18, 2011)
Performance table (as of Mar 18, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan Tactical Asset Allocation Moderate | 4% | 33% | 6% | 74% | 6% | 59% |
| Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan Strategic Asset Allocation Moderate | 9% | 82% | 3% | 19% | 4% | 20% |
| Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate | -3% | -32% | 2% | 16% | 4% | 28% |
| Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 10% | 69% | 3% | 13% | 4% | 14% |
Currently are doing well. But these asset classes are not available to Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan participants.
To summarize, Tiffany & Co. Employee Profit Sharing and Retirement Savings 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
and Foreign Equity
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: TIF, SPY, VTI, EFA, VEU, AGG, BND, CIU, BIV, IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV, TZE, TZG, TZL, TZV, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IOO, VT, SHY, SHV, VGSH, PLK, USY, IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG, IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV, IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA, IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK, GWL, PFA