Retirement Income ETFs vs. Income Mutual Funds: An Update

09/11/2011 0 comments

We first compared asset allocation portfolios using dividend ETFs (and bond ETFs) and those using income mutual funds on Retirement Income Investing: ETFs vs. Mutual Funds more than two months ago. Let's review these two plans: Retirement Income ETFs  and  Schwab Income Mutual Fund Select List.

Here are the asset classes covered by the two plans:


The list of minor asset classes covered by Retirement Income ETFs The list of minor asset classes covered by Schwab Income Mutual Fund Select List
Diversified Emerging Mkts: EEM, VWO, DEM
Emerging Markets Bond: EMB, PCY
Equity Energy: AMJ
Foreign Large Value: PID, IDV
Global Real Estate: RWX
High Yield Bond: HYG
Inflation-protected Bond: TIP
Intermediate Government: IEI
Intermediate-term Bond: CIU, CORP, MBB
Large Blend: VIG
Large Value: DVY, SDY, VYM, FVD
Long Government: IEF, TLT
Long-term Bond: LQD, VCLT
Mid-cap Value: PEY
Miscellaneous Sector: PFF
Muni National Long: MUB
Muni Short: SHM
Real Estate: IYR, ICF, VNQ
Short Government: SHY
Short-term Bond: CSJ, VCSH
World Bond: BWX, WIP
Emerging Markets Bond: TGINX
Foreign Large Blend: SICNX, LISOX
Foreign Large Value: AAIPX
High Yield Bond: STHTX, MWHYX
Inflation-protected Bond: ACITX
Intermediate Government: SWGSX, CPTNX
Intermediate-term Bond: SWIIX, SAMFX, PTTDX, PGBOX, MWTRX, FTRFX
Large Growth: SWLSX, JENSX
Large Value: TWEIX, PQIAX
Mid-cap Blend: NMMCX
Mid-cap Value: ARDEX
Multisector Bond: PONDX
Muni National Interm: SWNTX, TWTIX, STTBX
Muni National Long: NOTEX, ACLVX
Muni Short: FSHIX
Real Estate: CSRSX
Short Government: FIGTX
Short-term Bond: FSTIX, ACSNX
Ultrashort Bond: SIGVX
World Bond: PFODX


Asset Class Retirement Income ETFs Schwab Income Mutual Fund Select List
REITs 4 1
Fixed Income 19 24
Sector Fund 2 0
Foreign Equity 2 3
Emerging Market Equity 3 0
US Equity 6 9
Other 0 0
Total 36 37


Little in the two plans' investment choice ratings has changed since then.  As of Sep 9, 2011, Retirement Income ETFs investment choice is rated as average and Schwab Income Mutual Fund Select List investment choice is rated as above 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:

Attribute Retirement Income ETFs Schwab Income Mutual Fund Select List
Diversification great (95%) great (85%)
Fund Quality below average (29%) great (85%)
Portfolio Building above average (67%) above average (71%)
Overall Rating average (64%) above average (80%)

Performance chart (as of Sep 9, 2011)

Performance table (as of Sep 9, 2011)

Portfolio Name2011 YTD1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR 5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate 2.49% 8% 80% 11% 84% 10% 71%
Retirement Income ETFs Strategic Asset Allocation Moderate -1.16% 5% 42% 5% 23% 3% 14%
Schwab Income Mutual Fund Select List Tactical Asset Allocation Moderate 3% 9% 84% 11% 101% 10% 92%
Schwab Income Mutual Fund Select List Strategic Asset Allocation Moderate -2.11% 4% 35% 4% 27% 3% 16%

Refer to detailed portfolio comparison.

Again, we are seeing income ETFs can still rival the well selected income mutual funds. This is a good news for income investors in their IRA investments or taxable account investments. ETFs have more flexibility and have a well defined and simple indexing strategy (isn't this what MyPlanIQ is also doing?).


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: SPX, VIG, DVY, SDY, ICF, RWX, HYG, LQD, IEF, TLT, TIP, AMJ, TWEIX, LISOX, CSRSX, PTTDX, Retirement Investments, IRAs, ETF Portfolios, Portfolio Management, Risk Management, Dividend ETFs

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