We expect the allocation templates for SAA-Optimal will not be changed often. They will be changed only when significant long term trends emerge. 

From the above, one can see that SAA-Equal Weight is very competitive in the last 10 years: it only under performed SAA-Optimal in the MyPlanIQ Diverisifed Core plan. However, if you look at the last 1-5 year performance, you will see that SAA-Optimal is very compatible with SAA-Equal Weight. As the world economy is going through a long period of anemic growth, we expect SAA-Optimal will out perform SAA-Equal Weight in the coming decade since equity market wise, we expect the US will actually do better. This leads to more allocation weights in the US equity in SAA-Optimal. Furthermore. as the long term bond yields are approaching to extremely low level, their hedging effect is diminishing. We have thus reduced long term bond exposures, compared with SAA-Equal Weight. This also explains part of the back testing performance difference. 

The following table shows similar performance difference for 401k and mutual fund plans: 

Portfolio Performance Comparison

Portfolio/Fund Name1 Week
Return*
YTD
Return**
1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe10Yr AR10Yr Sharpe
Ford Motor 401K Strategic Asset Allocation – Optimal Moderate-1.0%12.0%18.1%161.1%10.5%88.2%3.6%20.6%8.4%57.7%
Ford Motors 401K Strategic Asset Allocation – Equal Weight Moderate-0.7%8.3%12.7%141.6%8.8%88.1%3.9%25.3%8.6%68.6%
FundAdvice Ultimate Buy and Hold Lazy Portfolio Strategic Asset Allocation – Equal Weight Moderate-0.6%8.5%15.3%127.0%8.3%59.3%2.8%14.9%9.5%60.0%
FundAdvice Ultimate Buy and Hold Lazy Portfolio Strategic Asset Allocation – Optimal Moderate-1.0%7.8%13.8%120.6%8.2%68.4%3.3%17.2%9.0%59.9%
Hewlett Packard 401K Strategic Asset Allocation – Equal Weight Moderate-0.4%10.0%16.5%170.6%10.9%103.0%3.6%23.5%10.2%80.6%
Hewlett Packard 401K Strategic Asset Allocation – Optimal Moderate-1.0%13.4%19.5%175.7%10.1%86.8%4.6%25.9%9.9%69.3%

*: NOT annualized

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