07/19/2011

Large technology companies such as those in Nasdaq 100 (QQQ) (COMP) have been doing exceptionally well in the past five years. They out performed large cap growth stocks. The following table shows the performance of large growth stock ETFs:

As of 7/15/2011

07/15/2011

For information on more ETF performance, please refer to here. For various stock styles (such as large growth, mid cap, small value etc.), please refer to MyPlanIQ's stock style table.

Nasdaq 100 (QQQ) was the front runner in last 1, 3 and 5 year periods. These technology companies sidestepped the last financial crisis with pristine balance sheets and conservative growth plans, having learned a lesson from the technology bubble in 2001-2002. What is more interesting is that large U.S. technology companies have dramtically expanded their global reach and are now considered multi-national companies. In the past decade, they outsourced some of their development to emerging markets, gradually learned and developed local markets and now are in the perfect position to reap what they have sowed in these rapidly developing economies.

For example, Apple (AAPL) just released its latest quarter earnings report that stated its Chinese sales reached $3.8 billion, up almost sixfold from a year earlier. The company plans to open 30 stores in the September period, including in Hong Kong, broadening a retail chain that generated $3.5 billion in sales last quarter.

The following are the top holdings of QQQ, as of 7/18/2011

In general, U.S. large growth companies are positioned well for the economic recovery. For a retirement portfolio, proper exposure into these high quality multi-national companies can be beneficial.

Symbols: COMP, QQQQ, AAPL, ORCL, MSFT, GOOG, INTC, CSCO, AMZN, QCOM, AMGN, CMSCA, ETFs

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06/01/2011

This article is part of a series of case studies we are conducting for various 401K plans. In this article, we will discuss how participants in Apple 401K can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today’s market environment.

Apple Inc., (Ticker: AAPL) together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players, as well as sells various related software, services, peripherals, and networking solutions. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells various third-party Macintosh, iPhone, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals through its online and retail stores, and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative customers. As of September 26, 2009, it had 273 retail stores, including 217 stores in the United States and 56 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.

Apple offers generous benefits to its employees. It was the first high tech company in Bay Area that offered free day care for employees' children.

Apple 401K's 401K plan consists of 14 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, REITs, Fixed Income. Four Core Asset Index Funds REITs's 401K plan consists of funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, REITs, Fixed Income.

As of May 27, 2011, Apple 401K investment choice is rated as average and Four Core Asset Index Funds REITs investment choice is rated as 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:

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies (SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical 4 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
Fixed Income: AGG or BND

Performance chart (as of May 27, 2011)

Performance table (as of May 27, 2011)

Currently are doing well. But these asset classes are not available to Apple 401K participants.

To summarize, Apple 401K plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. Currently, the tactical asset allocation strategy indicates overweighing on Foreign Equity, REITs and Fixed Income funds.


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.

Symbols:AAPL, CASH, VBMFX, LHYZX, FBAKX, FGRIX, FMGKX, VITPX, VITSX, NAESX, FCNTX, RGRYX, VGTSX, VDMIX, TAREX, VTSMX, VGSIX

Exchange Tickers: (AAPL), (CASH), (VBMFX), (LHYZX), (FBAKX), (FGRIX), (FMGKX), (VITPX), (VITSX), (NAESX), (FCNTX), (RGRYX), (VGTSX), (VDMIX), (TAREX), (VTSMX), (VGSIX)