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)

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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