 |
Vanguard ETF: |  |
7.4%* |
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Diversified Core: | |
8.1%* |
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Six Core Asset ETFs: | |
7.3%* |
Articles on HRB
- H&R Block Can Use Its Financial Prowess to Help Its Own 401K Plan
06/24/2011
Retirement investing is a long term process. This report reviews H&R Block Retirement Savings Plan. We will discuss the investment choices and present the plan rating by MyPlanIQ. Asset allocation portfolios and their performance are presented.
Plan Review and Rating
H&R Block, Inc. (HRB), through its subsidiaries, provides tax preparation, retail banking, and various business advisory and consulting services. It operates in three segments: Tax Services, Business Services, and Corporate.
H&R Block Retirement Savings Plan's 401K plan consists of 21 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
Asset Class Ticker Name Foreign Large Blend RERFX American Funds EuroPacific Gr R5 LARGE GROWTH RGAFX American Funds Growth Fund of Amer R5 LARGE VALUE DODGX Dodge & Cox Stock Target Date 2000-2010 FFFBX Fidelity Freedom 2000 Target Date 2000-2010 FFFVX Fidelity Freedom 2005 Target Date 2000-2010 FFFCX Fidelity Freedom 2010 Target Date 2011-2015 FFVFX Fidelity Freedom 2015 Target Date 2016-2020 FFFDX Fidelity Freedom 2020 Target Date 2021-2025 FFTWX Fidelity Freedom 2025 Target Date 2026-2030 FFFEX Fidelity Freedom 2030 Target Date 2031-2035 FFTHX Fidelity Freedom 2035 Target Date 2036-2040 FFFFX Fidelity Freedom 2040 Target Date 2041-2045 FFFGX Fidelity Freedom 2045 Target Date 2050+ FFFHX Fidelity Freedom 2050 Retirement Income FFFAX Fidelity Freedom Income SMALL BLEND HASCX Harbor Small Cap Value Instl Intermediate-Term Bond PTTRX PIMCO Total Return Instl Mid-Cap Growth VMGRX Vanguard Mid Cap Growth LARGE BLEND VINIX Vanguard Institutional Index Moderate Allocation VWELX Vanguard Wellington SHORT GOVERNMENT STABLEVALUE STABLEVALUE As of Jun 23, 2011, this plan investment choice is rated as 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 poor (10%)
Fund Quality -- Rated as great (87%)
Portfolio Building -- Rated as below average (31%)
Overall Rating: average (41%)The plan is clearly a traditional U.S. and developed country centric plan. Important asset classes such as emerging market stocks(EEM) and REITs (IYR) are missing. This plan is rated very high in its fund quality ranking but lags dramatically in terms of diversification.
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 Jun 23, 2011)Performance table (as of Jun 23, 2011)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe H&R Block Retirement Savings Plan Tactical Asset Allocation Moderate 9% 66% 7% 73% 8% 82% H&R Block Retirement Savings Plan Strategic Asset Allocation Moderate 11% 128% 5% 28% 6% 43% Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate 4% 22% 3% 23% 4% 38% Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate 17% 126% 4% 12% 5% 20% Again, because of its low cost and high quality fund choices, the plan's strategic asset allocaiton portfolio outperforms the standard three asset class portfolio.
To summarize, with the global economy being well developed and more balanced, we would expect H&R Block can use its financial savvy (that they use to help their customers in their personal finance) to improve their own 401k plan offering. Adding funds to enable exposures in emerging markets and alternative investments such as Real Estate Investment Trusts (REITs) is a good direction to pursue.
Symbols: HRB, VTI, VEU, BND, RERFX, RGAFX, DODGX, PTTRX, VWELX, 401k
Exchange Tickers: (HRB), (STABLEVALUE), (VTI), (VEU), (BND), (RERFX), (RGAFX), (DODGX), (FFFBX), (FFFVX), (FFFCX), (FFVFX), (FFFDX), (FFTWX), (FFFEX), (FFTHX), (FFFFX), (FFFGX), (FFFHX), (FFFAX), (HASCX), (PTTRX), (VMGRX), (VINIX), (VWELX)
