401K Investments: Moody's Profit Participantion Plan Offers Good Diversification and Quality Funds
09/14/2011 0 comments
Moody's is well known for its debt rating service. Through its subsidiaries, it provides credit ratings; credit and economic related research, data, and analytical tools; risk management software; and quantitative credit risk measures, credit portfolio management solutions, training, and financial credentialing and certification services worldwide. Famed investor Warren Buffett is a major shareholder of Moody's common stocks.
As one would expect, Moody's own credit and risk rating expertise should help to design and offer a good retirement investment plan to its employees. In this report, we review Profit Participation Plan of Moody’s Corporation plan and its asset allocation portfolio building capability.
The plan consists of 25 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.
Asset Class | Ticker | Name |
---|---|---|
Conservative Allocation | FIRJX | Fidelity Income Replacement 2016 |
LARGE BLEND | FUSEX | Fidelity Spartan U.S. Equity Index Inv |
Intermediate-Term Bond | FBIDX | Fidelity U.S. Bond Index |
DIVERSIFIED EMERGING MKTS | LZEMX | Lazard Emerging Markets Equity Instl |
LARGE GROWTH | MLAIX | MainStay Large Cap Growth I |
REAL ESTATE | RRRRX | DWS RREEF Real Estate Securities Inst |
MID-CAP VALUE | GCMAX | Goldman Sachs Mid Cap Value A |
Retirement Income | FFFAX | Fidelity Freedom Income |
Target Date 2000-2010 | FFFVX | Fidelity Freedom 2005 |
Target Date 2000-2010 | FFFCX | Fidelity Freedom 2010 |
Target Date 2016-2020 | FFFDX | Fidelity Freedom 2020 |
Target Date 2026-2030 | FFFEX | Fidelity Freedom 2030 |
Target Date 2036-2040 | FFFFX | Fidelity Freedom 2040 |
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 2041-2045 | FFFGX | Fidelity Freedom 2045 |
Target Date 2050+ | FFFHX | Fidelity Freedom 2050 |
MID-CAP BLEND | FLPSX | Fidelity Low-Priced Stock |
Mid-Cap Growth | FMCSX | Fidelity Mid-Cap Stock |
Foreign Large Growth | FDIVX | Fidelity Diversified International |
MID-CAP BLEND | FSEMX | Fidelity Spartan Extended Mkt Index Inv |
Foreign Large Blend | FSIIX | Fidelity Spartan International Index Inv |
LARGE VALUE | EILVX | Eaton Vance Large-Cap Value I |
Intermediate-Term Bond | PTTRX | PIMCO Total Return Instl |
As of Sep 13, 2011, this plan investment choice is rated as above average based 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 above average (68%)
Fund Quality -- Rated as average (65%)
Portfolio Building -- Rated as above average (69%)
Overall Rating: above average (67%)
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 5 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
REITs: IYR or VNQ or ICF
Emerging Market Equity: EEM or VWO
Fixed Income: AGG or BND
Performance chart (as of Sep 13, 2011)
Performance table (as of Sep 13, 2011)
Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
---|---|---|---|---|---|---|
Profit Participation Plan of Moody’s Corporation Tactical Asset Allocation Moderate | -0% | 14% | 11% | 90% | 10% | 84% |
Profit Participation Plan of Moody’s Corporation Strategic Asset Allocation Moderate | 2% | 27% | 4% | 20% | 4% | 19% |
Five Core Asset ETF Benchmark Tactical Asset Allocation Moderate | 6% | 61% | 10% | 76% | 9% | 64% |
Five Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 2% | 27% | 5% | 22% | 4% | 15% |
Currently Commodities, International Bonds and Fixed Income are doing well. Only Fixed Income is available to Profit Participation Plan of Moody’s Corporation participants.
Diversification and proper risk management are the two major key factors in 401k investing. Moody's plan provides a reasonable diversified asset classes for its participants. Participantscan achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: MCO, VTI, VEU, VWO, VNQ, BND, FIRJX, FUSEX, FBIDX, LZEMX, MLAIX, RRRRX, GCMAX, FFFAX, FFFVX, FFFCX, FFFDX, FFFEX, FFFFX, FFVFX, FFTWX, FFTHX, FFFGX, FFFHX, FLPSX, FMCSX, FDIVX, FSEMX, FSIIX, EILVX, PTTR, 401K Investments, Retirement Investing, Portfolio Management, Asset Allocation, Risk Management
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