Tyco International Ltd. provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products to customers worldwide.

TYCO INTERNATIONAL RETIREMENT SAVINGS and INVESTMENT PLAN IV  consists of 20 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.

 

Asset Class Ticker Name
LARGE GROWTH FDGRX Fidelity Growth Company
LARGE VALUE VWNFX Vanguard Windsor II
LARGE BLEND FUSVX Fidelity Spartan U.S. Equity Index Adv
LARGE GROWTH PAPIX Allianz CCM Capital Appreciation Instl
SMALL BLEND NAESX Vanguard Small Cap Index
Target Date 2000-2010 FFFBX Fidelity Freedom 2000
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 2050+ FFFHX Fidelity Freedom 2050
Moderate Allocation FBALX Fidelity Balanced
Retirement Income FFFAX Fidelity Freedom Income
Moderate Allocation CTFAX Columbia Acorn Thrm;A
Intermediate-Term Bond BIV Vanguard Intermediate-Term Bond ETF
Moderate Allocation FPURX Fidelity Puritan
LARGE BLEND FUSEX Fidelity Spartan 500 Index Inv
WORLD STOCK JAWWX Janus Worldwide T
LARGE BLEND NBGTX Neuberger Berman Guardian Tr

 

Asset Class Number of funds
REITs 0
Balanced Fund 9
Fixed Income 1
Commodity 0
Sector Fund 0
Foreign Equity 1
Emerging Market Equity 0
US Equity 7
Other 2
Total 20

As of Sep 10, 2013, this plan investment choice is rated as below average 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:

Diversification — Rated as below average (16%)
Fund Quality — Rated as poor (5%)
Portfolio Building — Rated as average (50%)
Overall Rating: below average (26%)

Using the above funds, one can construct model portfolios with two asset allocation strategies: strategic and tactical asset allocation strategies (SAA and TAA for participants in TYCO INTERNATIONAL RETIREMENT SAVINGS and INVESTMENT PLAN IV).

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.

The following compares these model portfolios: 

Portfolio Performance Comparison

Ticker/Portfolio Name 1Yr AR 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe 10Yr AR 10Yr Sharpe
Tyco International Retirement Savings and Investment Plan IV Strategic Asset Allocation – Equal Weight Moderate 7.6% 7.9% 0.96 6.1% 0.5 5.4% 0.44
TYCO INTERNATIONAL RETIREMENT SAVINGS and INVESTMENT PLAN IV Strategic Asset Allocation – Optimal Moderate 9.6% 10.5% 1.02 8.1% 0.54 6.3% 0.43
Tyco International Retirement Savings and Investment Plan IV Tactical Asset Allocation Moderate 9.6% 9.5% 1.41 7.3% 0.94 6.5% 0.71
VFINX (Vanguard 500 Index Investor) 20.6% 17.2% 1 8.6% 0.33 7.3% 0.3
VBINX (Vanguard Balanced Index Inv) 11.8% 11.5% 1.16 7.7% 0.51 6.9% 0.48

The performance has not bee stellar but is reasonable. TYCO INTERNATIONAL RETIREMENT SAVINGS and INVESTMENT PLAN IV would do well by their employees to consider reviewing their existing funds and adding an additional asset class.

TYCO INTERNATIONAL RETIREMENT SAVINGS and INVESTMENT PLAN IV participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.

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.