Jabil Enables Its Employees to Access to Reasonable Funds in Their 401K Plan
03/23/2011 0 comments
Jabil Circuit, Inc., together with its subsidiaries, provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. The company was founded in 1966 and is headquartered in St. Petersburg, Florida.
Jabil 401k Retirement Plan is a defined contribution plan with a profit-sharing component and 401k feature. In this article, we will discuss the investment choices and present the plan rating by MyPlanIQ.
The 401K plan consists of 20 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. Some of the fund choices include
| Asset Class | Ticker | Name |
|---|---|---|
| Retirement Income | FFFAX | Fidelity Freedom Income |
| Target Date 2000-2010 | FFFBX | Fidelity Freedom 2000 |
| Target Date 2000-2010 | FFFCX | Fidelity Freedom 2010 |
| Target Date 2016-2020 | FFFDX | Fidelity Freedom 2020 |
| Target Date 2026-2030 | FFFEX | Fidelity Freedom 2030 |
| MID-CAP BLEND | FSEMX | Fidelity Spartan Extended Mkt Index Inv |
| Target Date 2036-2040 | FFFFX | Fidelity Freedom 2040 |
| Target Date 2000-2010 | FFFVX | Fidelity Freedom 2005 |
| Target Date 2011-2015 | FFVFX | Fidelity Freedom 2015 |
| Target Date 2021-2025 | FFTWX | Fidelity Freedom 2025 |
| Target Date 2031-2035 | FFTHX | Fidelity Freedom 2035 |
| Target Date 2050+ | FFFHX | Fidelity Freedom 2050 |
| SHORT GOVERNMENT | STABLEVALUE | Fidelity Advisor Stable Value |
| Intermediate-Term Bond | PTTRX | PIMCO Total Return Instl |
| MID-CAP VALUE | FRBSX | Franklin Balance Sheet Investment A |
| LARGE VALUE | AADEX | American Beacon Lg Cap Value Inst |
| LARGE GROWTH | RGAEX | American Funds Growth Fund of Amer R4 |
| Foreign Large Blend | REREX | American Funds EuroPacific Gr R4 |
| Mid-Cap Growth | RAISX | Rainier Small/Mid Cap Equity Instl |
| SMALL BLEND | PRSVX | T. Rowe Price Small-Cap Value |
As of Mar 22, 2011, this plan investment choice is rated as 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 poor (10%)
Fund Quality -- Rated as average (44%)
Portfolio Building -- Rated as above average (66%)
Overall Rating: average (42%)
The plan, like many 401K plans offered by other companies, is traditional: the fund choices allow exposures to only U.S. stocks, developed country stocks and fixed income. Some of stock funds are of high quality: American Funds Growth Fund of America (RGAEX), American Funds EuroPacific (REREX) and Franklin Balance Sheet (FRBSX). On the fixed income side, it has the most popular fund PIMCO Total Return (PTTRX).
The major drawback of the plan is that it lacks of funds that enable participants to invest in two other major asset classes: Emerging market stocks (EEM) (VWO) and Real Estate Investment Trusts REITs (IYR) (VNQ).
In the following, we study how the plan fund choices would allow a typical participant to construct a meaningful asset allocation portfolio.
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 Jabil 401(k) Retirement 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.
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 Mar 22, 2011)
Performance table (as of Mar 22, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Jabil 401(k) Retirement Plan Tactical Asset Allocation Moderate | 7% | 55% | 7% | 75% | 8% | 76% |
| Jabil 401(k) Retirement Plan Strategic Asset Allocation Moderate | 10% | 99% | 6% | 41% | 6% | 38% |
| Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate | -2% | -32% | 2% | 16% | 4% | 28% |
| Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 10% | 69% | 3% | 13% | 4% | 14% |
Currently Commodities, Real Estate and US Equity are doing well. Only US Equity is available to Jabil 401(k) Retirement Plan participants.
This plan beats the three asset benchmark by virtue of the US asset class choices. If would be a stronger plan with more choices in the missing asset classes we identified.
To summarize, Jabil 401(k) Retirement Plan participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Jabil 401(k) Retirement Plan would do well by their employees to consider reviewing their existing funds and adding an additional asset class.
Symbols:JBL,SPY,VTI,EFA,VEU,AGG,BND,EEM,IYR,VNQ,VWO,RGAEX,REREX,FRBSX,PTTRX,PRSVX,
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.
comments
0
Or Start FREE 30-day trial now >>
