Global Media Giant News Corp Should Extend Diversified Offerings in Its 401K Plan
07/16/2011 0 comments
News Corporation (NWS) (NWSA) operates as a diversified media company worldwide. News Corp has news and entertainment offerings in the United States, Latin America, Europe, and Asia. News Corp owns Fox News, Dow Jones (Wall Street News and Barron's), along with other major newspaper, TV and film properties. News Corporation was founded in 1922 and is based in New York, New York. It is a global news media giant.
News America (News Corp) 401k Savings Plan, like any other work place retirement plans, offers a limited choice of mutual funds for its plan participants. The plan consists of six funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
| Asset Class | Ticker | Name |
|---|---|---|
| MID-CAP VALUE | HMVYX | Hartford Mid Cap Value Y |
| SMALL VALUE | PVADX | Allianz NFJ Small Cap Value Admin |
| Intermediate-Term Bond | PTTRX | PIMCO Total Return Instl |
| Foreign Large Blend | SCINX | DWS International S |
| LARGE BLEND | FUSEX | Fidelity Spartan U.S. Equity Index Inv |
| WORLD STOCK | TGADX | Templeton Growth Adv |
As of Jul 13, 2011, this plan investment choice is rated as averagebased 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 poor (4%)
Fund Quality -- Rated as average (56%)
Portfolio Building -- Rated as average (55%)
Overall Rating: average (40%)
The plan has a poor diversification rating as it lacks of emerging market stocks and Real Estate Investment Trusts (REITs) coverage. Three out of six funds are U.S. small cap value, mid cap value and large cap blend stock funds. These are more or less value tilted, missing some of other important styles such as growth. In fixed income asset, it has one PIMCO total return bond fund, managed by famed bond manager Bill Gross. Though this fund is considered to be one of the best bond funds, it is desirable to offer some other bond funds such as inflation protected funds.
The lack of diversification does show its dificiency: Currently Real Estate, US Equity and Commodities are doing well. Only US Equity is available to News America (News Corp) 401k Savings Plan participants. The following are the trend scores of major asset classes.
| Assets Class | Symbols | 07/15 Trend Score | 07/08 Trend Score | Direction |
|---|---|---|---|---|
| Gold | GLD | 12.76% | 9.67% | ^ |
| US Equity REITs | VNQ | 10.85% | 14.72% | v |
| Commodities | DBC | 10.36% | 8.61% | ^ |
| US Stocks | VTI | 6.98% | 9.37% | v |
| International REITs | RWX | 6.67% | 8.75% | v |
| US High Yield Bonds | JNK | 4.69% | 5.3% | v |
| Emerging Market Stks | VWO | 4.11% | 5.79% | v |
| Municipal Bonds | MUB | 3.74% | 2.44% | ^ |
| International Treasury Bonds | BWX | 3.61% | 4.84% | v |
| Intermediate Treasuries | IEF | 3.48% | 3.48% | v |
| International Developed Stks | EFA | 3.25% | 6.09% | v |
| Emerging Mkt Bonds | PCY | 2.93% | 3.26% | v |
| US Credit Bonds | CFT | 2.56% | 2.82% | v |
| Frontier Market Stks | FRN | 2.48% | 4.49% | v |
| Total US Bonds | BND | 2.0% | 2.12% | v |
| Mortgage Back Bonds | MBB | 1.61% | 1.63% | v |
| Treasury Bills | SHV | 0.04% | 0.03% | ^ |
Portfolio Building
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 Jul 13, 2011)
Performance table (as of Jul 13, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| News America (News Corp) 401k Savings Plan Tactical Asset Allocation Moderate | 13% | 179% | 10% | 105% | 9% | 94% |
| News America (News Corp) 401k Savings Plan Strategic Asset Allocation Moderate | 13% | 218% | 7% | 53% | 6% | 47% |
| Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate | 6% | 89% | 3% | 42% | 5% | 44% |
| Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 17% | 186% | 5% | 26% | 5% | 24% |
To summarize, News Corp's 401K plan, unlike its sponsor company's global and diversified reach, can be extended to allow its participants to have exposures in other assets such as emerging market stocks (EEM) (VWO) and REITs (IYR) (VNQ). Experienced participants can also consider choosing its self-directed brokerage option which has more diversified fund choices.
Symbols: NWS, EEM, VWO, IYR, VNQ, PTTRX, Retirement Investing, 401K
Exchange Tickers: (NWSA), (NWS), (EEM), (VWO), (IYR), (VNQ), (PTTRX)
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.
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