Vanguard ETF: | 7.4%* | ||
Diversified Core: | 8.1%* | ||
Six Core Asset ETFs: | 7.3%* |
Articles on ti
- John Wasik’s Nano Portfolio Performance Scrutinized
09/14/2010
John Wasik has been a professional journalist and author for 30 years specializing in personal finance, the environment, investing and social issues. John has proposed a Nano plan investment portfolio which employs just a handful of index or exchange- traded funds (ETFs) to cover virtually the entire world of bond and stock markets. This portfolio is supposed to be rebalanced annually.
John Wasik presents a classic asset allocation strategy with simple buy and hold.
- 20% in Vanguard Total Stock Market VIPERS (VTI) – alternatives: SPY, IWM
- 20% in Vanguard Total International (VGTSX) – alternatives: EFA, VEU, EEM, VWO, ADRE
- 20% in Vanguard REIT VIPERS (VNQ) – alternatives: IYR, ICF
- 20% in iShares Lehman TIPS Bond (TIP)
- 20% in iShares Lehman Aggregate Bond (AGG) – alternative: BND
Things to note about the portfolio:- With 40% in fixed income, this would be considered moderate risk
- With VGTSX covering both international and emerging markets (albeit in one fund) this would be something between a 4 and 5 asset class portfolio
- VGTSX is not an ETF; while VGTSX can easily be replaced by VEU (Vanguard FTSE All-World ex-US ETF) we will keep VGTSX because it has a longer history for back testing
We will make a comparison of the performance of this portfolio with
- Rebalancing every month as opposed to every year
- Simpler Is Better (SIB) portfolios we discussed in a previous article,
- Tactically managing the portfolio
The first set of results compares strategic asset allocation performance. What we note is:
- All portfolios suffer from the sharp downturn and is what is driving the increasing move towards a tactical allocation strategy
- The lazy portfolio – rebalancing once a year performs as well as the monthly rebalancing
- Wasik’s portfolio performance matches the 4 Asset SIB closely
- The extra asset class in the 5 asset SIB enables it to outperform everything else
Wasik's portfolio against SIBs Annualized Returns 1 year 3 years 5 years Wasik original 16,75 1.22 5.03 Wasik monthly rebalance 16,27 0.18 4.39 4 SIB SAA 15.11 1.08 4.37 5 SIB SAA 15 2.35 6.33
The second set of results compares tactical asset allocation performance. What we note is:- The tactical asset allocation strategies clearly mitigate the downturn
- Wasik’s portfolio performance matches the 4 Asset SIB closely when tactical asset allocation strategies are applied to both
- The extra asset class in the 5 asset SIB enables it to outperform everything else
Annualized Returns 1 year 3 years 5 years Wasik TAA 16.53 8.47 10.43 4 SIB TAA 15.67 6.65 9.04 5 SIB TAA 12.62 8.13 11.35
Takeaways:- ETF’s are a good vehicle for any portfolio and with increasing track record, it’s possible to demonstrate good historical performance
- It is increasingly clear that deploying a tactical asset allocation strategy is key. All buy and hold strategies are going to suffer the same downturn properties and with choppy market conditions, minimizing downside risk is critical
- With a buy and hold, there is little difference between monthly or annual rebalancing so you can be very lazy if you don’t mind the downside!
- Five asset classes perform better in all cases – in the TAA case, the five asset SIB gives you an extra 6% a year since inception – doubling the asset base every decade
labels:investments,
Symbols:ti,vnq,tip,agg,veu,spy,iwm,efa,iyr,icf,bnd,eem,vwo,adre,
- Aflac Incorporated 401(k) Savings and Profit Sharing Plan Report On 12/03/2010
12/03/2010
This report reviews Aflac Incorporated 401(k) Savings and Profit Sharing Plan plan. We will discuss the investment choices and present the plan rating by MyPlanIQ. Current economic and market conditions are discussed in the context of the investment portfolios in the plan. We will then show how participants in Aflac Incorporated 401(k) Savings and Profit Sharing Plan can achieve reasonable investment results using asset allocation strategies.
Plan Review and Rating
AFLAC Inc (Ticker:AFL) has the "Aflac Incorporated 401(k) Savings and Profit Sharing Plan".
Aflac Incorporated 401(k) Savings and Profit Sharing Plan's 401K plan consists of 11 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. The list of minor asset classes covered:
Foreign Large Blend: EFA, VEU, GWL, PFA
Intermediate-term Bond: AGG, CIU, BIV, BND
Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
Large Growth: IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG
Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV
Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
Moderate Allocation: AOM
Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
As of Dec 2, 2010, this plan investment choice is rated as 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 (35%)
Fund Quality -- Rated as (33%)
Portfolio Building -- Rated as (36%)
Overall Rating: (35%)Current Economic and Market Conditions
We have experienced an uncertain 2010: plenty of worries on whether the US economy will climb out of the great recession and recover.
- The Federal Reserve embarked on Quantitative Easing II (QE2) to stimulate the economy.
- The housing market is still at its low but largely stabilized.
- The unemployment rate is stuck at 9%.
Americans continue to face an uncertain future, given (among others) the high unemployment rate, large federal and local government debts and global trade imbalance. With such an economic backdrop, the stock and debt markets are going to be volatile. Despite this, markets have been resilient and appear positioned to rebound.
In this market it is even more critical to properly diversify and respond market changes. MyPlanIQ offers two asset allocation strategies: strategic and tactical asset allocation strategies ( SAA and TAA for participants in Aflac Incorporated 401(k) Savings and Profit Sharing Plan).
Strategic Asset Allocation is based on well known modern portfolio theory and its key features include: diversification, proper fund selection and periodically re-balancing.
Tactical Asset Allocation works on a diversified array of assets provided by funds in a plan and adjusts asset mixes based on market conditions such as asset price momentum utilized by TAA.
Portfolio Discussions
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 Dec 2, 2010)Performance table (as of Dec 2, 2010)
Portfolio Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe Aflac Incorporated 401(k) Savings and Profit Sharing Plan Tactical Asset Allocation Moderate 4% 34% 5% 64% 8% 81% Aflac Incorporated 401(k) Savings and Profit Sharing Plan Strategic Asset Allocation Moderate 10% 100% 2% 8% 6% 31% Three Core Asset ETF Index Funds Tactical Asset Allocation Moderate -4% -35% 1% 9% 4% 27% Three Core Asset ETF Index Funds Strategic Asset Allocation Moderate 9% 60% -0% -3% 4% 13% Currently, asset classes in US Equity (SPY,VTI), Foreign Equity (EFA,VEU) and Fixed Income (AGG,BND) are doing relatively well. These asset classes are available to Aflac Incorporated 401(k) Savings and Profit Sharing Plan participants.
To summarize, Aflac Incorporated 401(k) Savings and Profit Sharing Plan plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
Symbols: AFL , SPY , VTI , EFA , VEU , AGG , BND , AOM , CIU , BIV , GWL , PFA , IVE , IWW , JKF , VTV , ELV , PWV , RPV , SCHV , IVV , IYY , IWV , VV , DLN , RSP , SCHX , IVW , IWZ , JKE , VUG , ELG , QQQQ , RPG , SCHG , IJK , IWP , VOT , EMG , PWJ , RFG , UKW , IJT , IWO , JKK , VBK , DSG , PWT , RZG , UKK
- ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Report On 12/03/2010
12/03/2010
- Apartment Investment and Management Company 401(k) Retirement Plan Report On 12/03/2010
12/03/2010
- ASSURANT 401(k) PLAN A&PLAN B Report On 12/03/2010
12/03/2010
- Abercrombie Fitch Co. Savings and Retirement Plan Report On 12/03/2010
12/03/2010
- Apache Design Solutions 401K Report On 12/03/2010
12/03/2010
- Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Report On 12/03/2010
12/03/2010
- AMERICAN EXPRESS RETIREMENT SAVINGS PLAN Report On 12/03/2010
12/03/2010
- ALLEGHENY ENERGY EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN Report On 12/03/2010
12/03/2010
- BAKER 401(k) PLAN Report On 12/03/2010
12/03/2010
- BRISTOL-MYERS SQUIBB COMPANY SAVINGS AND INVESTMENT PROGRAM Report On 12/03/2010
12/03/2010
- PEABODY WESTERN-UMWA 401(K) PLAN Report On 12/03/2010
12/03/2010
- Peabody Investments Corp.Employee Retirement Account Report On 12/03/2010
12/03/2010
- Capital Accumulation Plan of The Chubb Corporation Report On 12/03/2010
12/03/2010
- CEPHALON, INC. 401(k) PROFIT SHARING PLAN Report On 12/03/2010
12/03/2010
- CABOT OIL & GAS CORPORATION SAVINGS INVESTMENT PLAN Report On 12/03/2010
12/03/2010
- CVS CAREMARK CORPORATION AND AFFILIATED COMPANIES Report On 12/03/2010
12/03/2010
- Danaher Corporation Subsidiaries Retirement and Savings Plan Report On 12/03/2010
12/03/2010
- Danaher Corporation Subsidiaries Savings Plan Report On 12/03/2010
12/03/2010
- EQT CORPORATION SAVINGS AND PROTECTION PLAN Report On 12/03/2010
12/03/2010
- Vanguard Variable Annuity Report On 12/06/2010
12/06/2010
- The Franklin Templeton NJBEST New Jersey 529 College Savings Plan Report On 12/07/2010
12/07/2010
- TD Ameritrade Commission Free ETFs Report On 12/07/2010
12/07/2010
- Qualcomm 401(k) Plan Report On 12/07/2010
12/07/2010
- Vanguard-VA-Clone Report On 12/07/2010
12/07/2010
- Tiffany Co. Employee Profit Sharing and Retirement Savings Plan Report On 03/21/2011
03/21/2011
- Sprint Nextel 401K Plan Report On 03/21/2011
03/21/2011
- Ford Motor 401K Report On 06/01/2011
06/01/2011
- David Swensen Six ETF Asset Individual Investor Plan Report On 06/02/2011
06/02/2011
- The Goldman Sachs 401(k) Plan Report On 06/03/2011
06/03/2011
- Professor Siegel`s Lazy WisdomTree ETFs Portfolio Report On 06/08/2011
06/08/2011
- Oracle Corporation 401(k) Savings and Investment Plan Report On 06/13/2011
06/13/2011
- Hewlett Packard 401K Report On 06/13/2011
06/13/2011
- Adobe Systems Inc 401K Retirement Savings Plan Report On 06222011
06/22/2011
- Hewlett Packard 401K Report On 06232011
06/23/2011