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Vanguard, the second-largest U.S. issuer of exchange traded funds, is again wielding its low-cost sword.
On April 26, <a href="https://www.benzinga.com/money/vanguard-review/">Vanguard</a> said it&#39;s lowering fees on 21 of its ETFs, including its two largest funds, the Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/voo#NYSE">VOO</a>) and the Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vti#NYSE">VTI</a>).
<h3>What Happened</h3>
VTI and VOO are the third- and fourth-largest U.S.-listed ETFs, respectively, and are <a href="https://etfdb.com/compare/market-cap/">two of the four</a> ETFs with more than $100 billion in assets under management. The $114.79 billion VTI is now charging 0.03 percent year, or $3 on a $10,000 investment, down from 0.04 percent. The $112.94 billion VOO also saw its annual fee reduced to 0.03 percent from 0.04 percent.
Including VOO and VTI, Vanguard announced lower fees on <a href="https://investornews.vanguard/lower-expense-ratios-on-21-vanguard-etfs-means-more-savings-for-you/">eight domestic ETFs</a>. The following ETFs saw their fees reduced to 0.04 percent from 0.05 percent: The Vanguard Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vug#NYSE">VUG</a>), the Vanguard Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vtv#NYSE">VTV</a>), the Vanguard Large-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vv#NYSE">VV</a>) and the Vanguard Mid-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vo#NYSE">VO</a>).
The Vanguard Extended Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vxf#NYSE">VXF</a>) saw its annual fee pared to 0.07 percent from 0.08 percent while the Vanguard High Dividend Yield ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vym#NYSE">VYM</a>) is charging 0.06 percent, down from 0.08 percent.
<h3>Why It&#39;s Important</h3>
As issuers have reduced fees across product lineups, international funds have steadily gotten cheaper. Nine international equity ETFs are part of the latest round of Vanguard fee reductions.
The following funds are now charging 0.09 percent, down from 0.10 percent: the Vanguard Total World Stock Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vt#NYSE">VT</a>), the Vanguard FTSE Europe ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vgk#NYSE">VGK</a>) and the Vanguard FTSE Pacific ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vpl#NYSE">VPL</a>).
The Vanguard Total International Stock ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vxus#NASDAQ">VXUS</a>) and the Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/veu#NYSE">VEU</a>) are now charging 0.09 percent, down from 0.11 percent.
The $72.16 billion Vanguard FTSE Developed Markets ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vea#NYSE">VEA</a>), the sixth-largest U.S.-listed ETF, saw its fee reduced to 0.05 percent from 0.07 percent,&nbsp;while the Vanguard FTSE All-World ex-US Small-Cap ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vss#NYSE">VSS</a>) saw a modest fee reduction of one basis point to 0.12 percent.
The Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vwo#NYSE">VWO</a>) and the Vanguard Global ex-U.S. Real Estate ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vnqi#NASDAQ">VNQI</a>) both now charge 0.12 percent annually, down from 0.14 percent. Home to $65.35 billion in assets under management, VWO is the world&#39;s largest emerging markets ETF.
<h3>What&#39;s Next</h3>
Vanguard also lowered the fees on four fixed income ETFs. The Vanguard Emerging Markets Government Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vwob#NASDAQ">VWOB</a>) now charges 0.30 percent, down from 0.32 percent. The Vanguard Total International Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bndx#NASDAQ">BNDX</a>) also a fee cut of two basis points to 0.09 percent.
The Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NYSE">BND</a>) and the Vanguard Tax-Exempt Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vteb#NASDAQ">VTEB</a>), Vanguard&#39;s first municipal bond ETF, both lowered fees by one basis point.
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Emerging markets stocks hit a rough spot last week as markets roiled by an intensifying geopolitical rift between the U.S. and North Korea. However, the saber rattling did not prompt large-scale departures from some emerging markets exchange-traded funds, although the MSCI Emerging Markets Index lost 2.3 percent last week.
The widely followed MSCI Emerging Markets Index is still up 22.6 year to date, more than double the 9.2 percent returned by the S&amp;P 500. That emerging markets benchmark was hampered last week due to weakness in South Korean stocks. South Korea, Asia&#39;s fourth-largest economy, is the second-largest country exposure the MSCI Emerging Markets Index at a weight of 14.6 percent.
Amid heightened threats and sharp rhetoric from neighboring North Korea, the iShares MSCI South Korea Capped ETF (NYSE: <a class="ticker" href="/stock/ewy#NYSE">EWY</a>) slipped 4.6 percent last week and saw increased defensive positioning in <a href="https://www.etftrends.com/traders-get-defensive-with-south-korea-etf/">the options market</a>.
<h3>Still Devoted</h3>
Investors remain devoted to the Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>), the largest emerging markets ETF by assets.
&ldquo;This continues VWO&rsquo;s impressive showing in 2017 in terms of attracting new assets, with more than $6.6 billion entering the fund during this time frame while the Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>) has added a not too shabby $2.8 billion,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial </a>Vice President Paul Weisbruch in a note Friday.
Year to date, VWO has added $6.6 billion in new money, a total surpassed by just nine other ETFs and just one other emerging markets ETF. Investors added almost $285 million to VWO last week, good for the sixth-best inflows among all U.S.-listed ETFs.
<h3>A Big Difference</h3>
Last week, VWO was less bad than the MSCI Emerging Markets Index. VWO lost 2 percent, outperforming the aforementioned emerging markets benchmark because the Vanguard fund tracks a different index that does not classify South Korea as a developing market.
VWO competes with the iShares Core MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/iemg#NYSE">IEMG</a>) on price. Both ETFs charge 0.14 percent per year, or $14 on a $10,000 investment. IEMG is one of the top asset-gathering ETFs this year as well and it holds shares of South Korean stocks.
&ldquo;VWO and IEMG of course both have the same expense ratio, and this likely speaks volumes about the growth of IEMG to the point where it has surpassed its much more tenured and more expensive sister ETF iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>).
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Disclosure: Todd Shriber owns shares of VWO.

Investors are looking for value outside the U.S. as one of the longest bull markets in history ages and that search is benefiting an array of international equity exchange traded funds tracking developed and emerging markets.
Data confirm as much. Year-to-date, five of the top 10 asset-gathering ETFs are ex-U.S. international equity funds &ndash; two emerging markets funds and three developed markets ETFs. At least four of those five ETFs can be considered &ldquo;cheap&rdquo; when it comes to fees.
Though it is not, at least not yet, among this year&#39;s top 10 asset-gathering ETFs, the iShares Core MSCI Total International Stock ETF (NASDAQ: <a class="ticker" href="/stock/ixus#NASDAQ">IXUS</a>) is adding new assets at a brisk pace.
<h3>A Little About IXUS</h3>
&ldquo;The fund has reeled in an impressive more than $1.7 billion year-to-date, and has gained ground on two larger funds from Vanguard that are presently ranked #1 and #2 in the space (IXUS is ranked #3) in terms of asset size,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial</a> Vice President Paul Weisbruch in a note out Monday.&nbsp;
Year-to-date inflows of $1.7 billion for IXUS represent a significant portion of the ETF&#39;s $5.8 billion in assets under management. IXUS, which debuted in October 2012, offers investors a deep bench to developed markets with a roster of over 3,300 holdings.
With an annual fee of just 0.11 percent, IXUS competes with some well-known Vanguard ETFs in terms of price. Those funds include the Vanguard FTSE All-Wld ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>) and the Vanguard Total International Stock ETF (NYSE: <a class="ticker" href="/stock/vxus#NYSE">VXUS</a>).
<h3>IXUS's Geographical Exposure And Sector Weights</h3>
&ldquo;Listed at 11 basis points in terms of its expense ratio, IXUS clearly was launched to take aim at VXUS (which has the same expense ratio), which hit the market in January of 2011,&rdquo; added Weisbruch. &ldquo;IXUS tracks the MSCI ACWI ex-U.S. Index, while VXUS tracks the FTSE Global All-Cap ex-U.S. Index, and it is fair to say that IXUS has been narrowing the AUM size gap recently thanks to healthy inflows.&rdquo;
IXUS features exposure to about 20 countries, including developed and emerging markets. The ETF&#39;s largest geographic allocations are Japan and the U.K., which combine for over 27 percent of the fund&#39;s weight.
Financials are the largest sector weight in IXUS at 21 percent while industrial, consumer discretionary and technology stocks combine for over a third of the fund&#39;s roster. IXUS has a three-year standard deviation of 12.2 percent.
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Vanguard keeps bolstering its reputation as one of the low-cost leaders among ETF issuers. Just days after the Pennsylvania-based firm <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/02/3363539/vanguard-pares-fees-on-high-dividend-etf">announced lower fees</a> for the popular Vanguard High Dividend Yield ETF (NYSE: <a class="ticker" href="/stock/vym#NYSE">VYM</a>), the company unveiled lower expense ratios on eight other ETFs.

Included in the new batch of fee reductions is the Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>), which has over $60 billion in assets under management making it the largest emerging markets ETF by that metric. VWO will now charge 0.18 percent from year, down from 0.2 percent. 

At 0.18 percent, VWO now has the same expense ratio as the iShares Core MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/iemg#NYSE">IEMG</a>), the ETF rolled about by BlackRock's iShares unit in October as lower cost alternative to VWO and the iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>).

Other Vanguard ETFs that now have lower fees include the Vanguard MSCI Pacific ETF (NYSE: <a class="ticker" href="/stock/vpl#NYSE">VPL</a>) and the Vanguard MSCI Europe ETF (NYSE: <a class="ticker" href="/stock/vgk#NYSE">VGK</a>) now have expense ratios of 0.12 percent down from 0.14 percent.

The Vanguard Total International Stock Index ETF (NYSE: <a class="ticker" href="/stock/vxus#NYSE">VXUS</a>) is home to a 0.16 percent annual expense ratio compared with 0.18 percent previously while the Vanguard Total World Stock Index ETF (NYSE: <a class="ticker" href="/stock/vt#NYSE">VT</a>) is now charging 0.19 percent compared with 0.22 percent prior to the announcement.

Investors will now pay 0.32 percent per year to own the Vanguard Global ex-US Real Estate ETF (NYSE: <a class="ticker" href="/stock/vnqi#NYSE">VNQI</a>), down from 0.35 percent. The Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>) also saw a three-basis point fee reduction to 0.15 percent from 0.18 percent.

The Vanguard FTSE All-World ex-US Small-Cap Index ETF (NYSE: <a class="ticker" href="/stock/vss#NYSE">VSS</a>) has a new expense ratio of 0.25 percent down from 0.28 percent. 

Over the past year, Vanguard has lowered fees on 45 of its ETFs, <a href="http://www.benzinga.com/markets/bonds/12/12/3201733/vanguard-trims-fees-on-sector-etfs">including its 10 sector funds</a>.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Sector ETFs

Events

Intraday Update

More Vanguard ETF Fee Cuts, Including VWO

"Permanent" is strong word in life and in investing. Even Warren Buffett, who has famously said multiple times that his favorite holding period for a stock is "forever," does sell some equity positions from time-to-time. 

Maybe nothing is forever, but it is possible for investors to own an ETF designed to help endure multiple market settings and that fund is the newly minted Global X Permanent ETF (NYSE: <a class="ticker" href="/stock/perm#NYSE">PERM</a>), which debuted on February 8.

The Global X Permanent ETF is off to a fine start, at least terms of attracting assets. PERM has over $9.9 million in AUM as investors have appeared intrigued by the fund's composition, which offers exposure to various asserts class designed to position PERM to weather market volatility.

When PERM debuted, it had target allocations of 25% to equity stocks, 25% to short term bonds, 20% to gold and 5% to silver, and 25% to long term bonds. PERM does not try to beat an index but rather maintains target allocations through passive indexing, according to a statement issued by Global X. 

Today, more than 24% of PERM's weight is allocated to the ETFS Physical Swiss Gold Shares (NYSE: <a class="ticker" href="/stock/sgol#NYSE">SGOL</a>) and the ETFS Physical Silver Shares (NYSE: <a class="ticker" href="/stock/sivr#NYSE">SIVR</a>) and the bond allocations are approximately true to the desired 25% to short-term and 25% to long-term desired weights.

The rest of the ETF's holdings are spread among U.S. large-caps, real estate stocks, materials names, global stocks and U.S. small-caps.

PERM's next largest positions include a 3.23% allocation to the Vanguard Small-Cap ETF (NYSE: <a class="ticker" href="/stock/vb#NYSE">VB</a>) and a 3.21% weight to the Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>).

In terms of individual stocks, PERM's 10 largest positions are all REITs, led by Prologis (NYSE: <a class="ticker" href="/stock/pld#NYSE">PLD</a>). The ETF does offer exposure to plenty of major energy and materials names such as Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>), Potash (NYSE: <a class="ticker" href="/stock/pot#NYSE">POT</a>) and BHP Billiton (NYSE: <a class="ticker" href="/stock/bhp#NYSE">BHP</a>), but on a percentage basis, energy and materials account for just over 5% of the fund's weight.

Technology and financial services names are also littered throughout PERM's equity positions. Apple (Nasdaq: <a class="ticker" href="/stock/aapl#Nasdaq">AAPL</a>), Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>), Google (Nasdaq: <a class="ticker" href="/stock/goog#Nasdaq">GOOG</a>), Goldman Sachs (NYSE: <a class="ticker" href="/stock/gs#NYSE">GS</a>), Qualcomm (Nasdaq: <a class="ticker" href="/stock/qcom#Nasdaq">QCOM</a>) and J.P. Morgan Chase (NYSE: <a class="ticker" href="/stock/jpm#NYSE">JPM</a>) are among the familiar, large-cap names found in PERM's lineup.

PERM has been lagging the broader market since its debut, but it's not unfair to pin the reason for that slack performance on gold in silver. In the past month, PERM is down 2%, but SGOL is down more than 4% and SIVR has plunged 8% over the same time. And that anecdote may indicate that even though it's a new fund with a small data sample to draw from, PERM may already be living up to its billing as a way of helping investors with longer time horizons cope with near-term market volatility.

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Checking In: A Permanent Place In Your Portfolio? (PERM, SIVR, VEU)

Vanguard, the third-largest U.S. ETF issuer, said it has lowered the expense ratios on six of its ETFs, including the Vanguard MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>). VWO, the largest emerging markets ETF, saw its expense ratio cut to 0.2% from 0.22%. The rival iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) also pared its expense ratio earlier this year.

Vanguard also lowered the fees on the Vanguard Total World Stock ETF (NYSE: <a class="ticker" href="/stock/vt#NYSE">VT</a>) to 0.22% from 0.25%. That gives the $1.6 billion ETF fees that are lower than 85% of comparable funds, according to the Vanguard Web site. The Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>) now has an expense ratio of 0.18% compared with 0.22% previously. VEU, with $12.5 billion in AUM, now cheaper than 86% of comparable funds, according to Vanguard data.

The Vanguard FTSE All-World ex-US Small Cap ETF (NYSE: <a class="ticker" href="/stock/vss#NYSE">VSS</a>) saw its fees reduced to 0.28% from 0.33%. The changes for VWO, VSS, VEU and VT went into effect on February 28. 

The Vanguard Total International Stock ETF (NYSE: VXUS) now has an expense ratio of 0.18% down from 0.22%. That makes the ETF cheaper than 86% of similar funds. The Vanguard High Dividend Yield ETF (NYSE: <a class="ticker" href="/stock/vym#NYSE">VYM</a>) saw its fees lowered to 0.13% from 0.18%. VYM is now cheaper than 90% of similar funds.

The lower expense ratios for VXUS and VYM went into effect on February 27.

Vanguard isn't the only <a href="http://www.benzinga.com/news/12/02/2386498/market-vectors-pares-fees-on-hard-assets-producers-etf-hap-moo-kol">ETF sponsor to announce fee cuts</a> this week. On Wednesday, Van Eck said it lowered the expense cap on the Market Vectors RVE Hard Assets Producers ETF (NYSE: <a class="ticker" href="/stock/hap#NYSE">HAP</a>) to 0.49% from 0.59%.

Market Vectors RVE Hard Assets Producers ETF

Vanguard Lowers Fees On 6 ETFs (VWO, VXUS, VT)

It's that time of year again. The time when we're reminded that Sports Illustrated is still in business because the venerable swimsuit issue is hitting mailboxes and news stands everywhere. Kidding aside, with the swimsuit issue comes the "Sports Illustrated Swimsuit Indicator," courtesy of Bespoke Investment Group.

Long story short, the indicator shows the S&amp;P 500 performs better in a year when an American model graces the cover than when a foreign model lands the prestigious honor. There might be something to that. Last year, Irina Shayk became the first Russian to grace the cover of the swimsuit issue.

That wasn't good news for U.S. stocks, nor was it good news for Russia ETFs as we <a href="http://www.benzinga.com/trading-ideas/long-ideas/11/02/874191/a-swimsuit-issue-bounce-for-russia-etfs">speculated it might be</a>. The Market Vectors Russia ETF (NYSE: <a class="ticker" href="/stock/rsx#NYSE">RSX</a>) traded around $39 at the time of Shayk's cover. The largest Russia-specific ETF closed below $31.40 today.

Fortunately for the bulls, American Kate Upton is on this year's cover. Assuming Bespoke's indicator proves accurate, the following ETFs might be worth a look.

Financial Select SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>)
We'll leave the comments about the age difference to the morality police, but Upton has been rumored to be romantically involved with New York Jets Quarterback Mark Sanchez. For better or worse, the financial services sector is the industry that is often most associated with New York City. Plus, if the S&amp;P 500 is really going higher, XLF's constituents are going to have to get in on the act.

iShares MSCI Australia Index Fund (NYSE: <a class="ticker" href="/stock/ewa#NYSE">EWA</a>)
The largest of the Australia-specific ETFs, the iShares MSCI Australia Index Fund makes the list for two reasons. First, part of the swimsuit issue was shot down under. Second, EWA is a good barometer of just how intense the risk on trade really is. Not to mention <a href="http://www.benzinga.com/markets/bonds/11/12/2227659/got-good-credit-these-countries-do-but-for-how-long">Australia still has an AAA credit rating</a>.

Vanguard FTSE All-World ex-US ETF (NYSE: <a class="ticker" href="/stock/veu#NYSE">VEU</a>)
The Vanguard FTSE All-World ex-US ETF is a legitimate swimsuit issue play because not all of the issue is shot in the U.S. and not all of the models are American. There's a big world out there beyond the cozy confines of U.S. borders and VEU helps investors play that theme. If VEU can find support in the $43 consider a small position and then add into it on a move above $45.

Market Vectors Russia ETF (NYSE: <a class="ticker" href="/stock/rsx#NYSE">RSX</a>)
We mentioned RSX earlier, but Irina Shayk is also featured in this year's issue. Maybe RSX and rivals like the SPDR S&amp;P Russia ETF (NYSE: <a class="ticker" href="/stock/rbl#NYSE">RBL</a>) will get their swimsuit surge a year late. It might be best to consider the iShares MSCI Russia Capped Index Fund (NYSE: <a class="ticker" href="/stock/erus#NYSE">ERUS</a>) if that happens because that's the best performing of the Russia ETF trio year-to-date.

Market Vectors Brazil Small-Cap ETF (NYSE: <a class="ticker" href="/stock/brf#NYSE">BRF</a>)
The search for other <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/02/2319813/brazils-stealthy-etf-studs">ETFs with which to access Brazil</a> has to include BRF. BRF's inclusion on this list comes because of Brazilian-born Izabel Goulart is found in the swimsuit issue. Or does it? The reality is BRF has been a stalwart performer to start the year and the fact that ETF does NOT hold Petrobras (NYSE: <a class="ticker" href="/stock/pbr#NYSE">PBR</a>) could once prove to be a positive.

Pre-Market Outlook

After-Hours Center

ERUS

Market Vectors Russia ETF Trust Shares of Beneficial Interest

ETFs For The Swimsuit Indicator

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iShares JPMorgan USD Emerging Markets Bond Fund

Using Asset Classes in Amerivest Guided Portfolios to Construct ETF Portfolios

CASH

VIMSX

VIPSX

VUSTX

Goldman Sachs Brings Asset Allocation Savvy to Its 401K Plan

"Mother was wrong: What you don't know can hurt you", that is a quote from a Wall Street Journal article <a href="http://online.wsj.com/article/SB10001424052748704628404576264632149178142.html?mod=rss_Retirement_Planning">Stress-Test Your Portfolio</a>, written by Jonathan Burton. 
The following main risks were outlined in the article: 
<ul>
<li>Inflation and Interest Rates: inflation usually comes with rising interest rates. That could reduce the value of existing bonds and cash, thus purchasing power. This is especially painful for baby boomers and retirees. Best Bet: 
<ul>
<li>U.S. &amp; international stocks (SPY) (EFA)</li>
<li>commodities (DBC) (GSG)</li>
<li>inflation-protected bonds (TIP)</li>
<li>real estate investment trusts (IYR) (VNQ)</li>
<li>cash. </li>
</ul>
</li>
<li>Disasters, War, Political and Economic Upheaval and Social Unrest: these unpredictable events are like black swans. Best Bet: 
<ul>
<li>Precious metanls like gold (GLD) or silver (SLV)</li>
<li>U.S. treasuries (TLT), (IEF)</li>
</ul>
</li>
<li>Markets and Companies: individual companies or even sectors have risks specific to themselves. Best Bet:
<ul>
<li>Diversification, no overlapped in terms of mutual funds, ETFs</li>
</ul>
</li>
<li>Playing It too Safe: to avoid risk is just not to join the game. However, you can miss major market advances and lose the purchasing power (even if you just want to preserve your capital). What is more dangerous for this type of investors is that they often sit on the sideline and capitulate at last, only getting into an already overheated market, resulting in big loss in a buy high, sell low fashion.  Best Bet: 
<ul>
<li>Put enough money (such as five year expense) in a bank and then the rest into a diversified portfolio with a risk you can accept. Rebalance regularly. </li>
</ul>
</li>
</ul>
The above risks are especially important in retirement investing: investors rely on their investments to fund their retirement needs.
The <a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=1,148">Six Core Asset ETFs</a> is a Simpler Is Better (SIB) plan that has only SIX candidate ETFs that cover all of the major asset classes: 
<ul>
<li>U.S. Equity: Vanguard Total Stock Market ETF (VTI)</li>
<li>Foreign Equity: Vanguard FTSE All-World ex-US ETF (VEU)</li>
<li>Emerging Market Equity: Vanguard Emerging Markets Stock ETF (VWO)</li>
<li>Real Estate Investments Trusts (REITs): Vanguard REIT Index ETF (VNQ)</li>
<li>Commoditiies: PowerShares DB Commodity Idx Trking Fund (DBC)</li>
<li>Total Bond Market: Vanguard Total Bond Market ETF (BND)</li>
</ul>
 
Check out its <a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17301&amp;follow=true">Strategic Asset Allocation Moderate</a> and <a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=17295&amp;follow=true">Tactical Asset Allocation Moderate</a> model portfolios. 
Or for more active investors, check out <a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=4,863">TD Ameritrade Commission Free ETFs</a> that has over 101 ETFs as candidate funds. 
Disclaimer: <a rel="nofollow" href="http://www.myplaniq.com/LTISystem/f401k__main.action">MyPlanIQ </a>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.
 
Exchange Tickers: (VTI), (VEU), (VWO), (VNQ), (DBC), (BND), (GLD), (SLV), (TIP), (TLT)
Symbols: <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VTI&amp;count=00118'>VTI</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00143'>VEU</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VWO&amp;count=00128'>VWO</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=00117'>VNQ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DBC&amp;count=00115'>DBC</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BND&amp;count=00174'>BND</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=GLD&amp;count=0041'>GLD</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SLV&amp;count=0017'>SLV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=Portfolio Strategies &amp; Asset Allocation&amp;count=001'>Portfolio Strategies &amp; Asset Allocation</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IRAs&amp;count=002'>IRAs</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=Retirement Investing&amp;count=002'>Retirement Investing</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=Risk&amp;count=002'>Risk</a>
 
 
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iShares Trust Barclays 7-10 Year Treasury Bond Fund

iShares Trust Dow Jones US Real Estate Fund Index

iShares Trust Barclays 20+ Year Treasury Bond Fund

4 Portfolio Risks You Should Be Aware Of

Time for Boomers to Understand What Diversification Brings them

By Lowell Herr at <a href="http://itawealthmanagement.com/">ITA Wealth Management</a>
Yesterday, I picked up <a href="http://seekingalpha.com/article/264344-lack-of-reits-and-commodities-now-shows-in-bernstein-s-no-brainer-portfolio-s-performance">this article</a> on Seeking Alpha titled, "Lack of REITs &amp; Commodities Now Shows in Bernstein's No-Brainer Portfolio's Performance." I first needed to look up the Bernstein No-Brainer Portfolio and found it included four ETFs. The <a href="http://itawealthmanagement.com/?p=5899">asset allocation</a> is quite simple.
IVW = 25%
VB = 25%
EFA or VFA = 25% I prefer to use VEU as my international investment.
BND = 25%
When I ran a Quantext Portfolio Planner analysis, I found the projected return to be 6.6%, projected uncertainty equals 13.8% for a ratio of 0.48. The Diversification Metric (DM) is a meager 16%. While this may be a No-Brainer Portfolio, it is projected to return less than the S&amp;P 500 without much diversity.
When I substituted TLT for the BND bond fund, projections improved slightly. With only this change, projected return increased to 7.65% or better than expected from the S&amp;P 500. <a href="http://itawealthmanagement.com/?p=4663">Risk </a>or projected uncertainty actually decreased slightly to 13.7%%. DM rose to 24%.
In the Seeking Alpha article, adding REITs and Commodities implied better results. While this was true in the past, is it likely to be true in the future? One would think so. However, when I ran the QPP analysis, including VWO, DBC, and VNQ lifted the return to 7.8% or only slightly better than the No-Brainer projections. Uncertainty jumped to 16.3% and DM actually fell to 23%. The Return/Uncertainty ratio was about the same at 0.54.
Given that QPP analysis is coming up with projections, and they are not significantly different from the No-Brainer Portfolio, I would go with the portfolio that adds more asset classes.
Exchange Tickers: (NYSE:BND), (NYSE:DBC), (NYSE:EFA), (NYSE:IVW), (NYSE:TLT), (NYSE:VB), (NYSE:VEU), (NYSE:VNQ), (NYSE:VWO)
Symbols: <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BND&amp;count=00165'>BND</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DBC&amp;count=00109'>DBC</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00158'>EFA</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IVW&amp;count=0048'>IVW</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=TLT&amp;count=0088'>TLT</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VB&amp;count=0036'>VB</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00139'>VEU</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=00112'>VNQ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VWO&amp;count=00123'>VWO</a>
 
 
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Improving on the No-Brainer Portfolio: Add More Asset Classes

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<div id="article_info">Living on borrowed time: nuclear reactors, oppressive governments, levees that keep out flood waters -- keeping things going -- just one more year. The temptation to delay until next time is very seductive until disaster strikes and the cost to repair, dwarfs the cost to prevent.  Many working people put off their retirement investing -- just one more year until it becomes a "hair on fire" problem -- which it now is for baby boomers for whom retirement is a near and present danger.</div>
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There is an easy to understand strategy that can improve returns with low risk. If you have a portfolio with the correct asset classes represented, over the long term, you will get better results at a lower risk than picking the latest and greatest fund or stock. This is not the bleeding edge of new ideas. This is proven and widely used – being the basis of most money manager's strategies.
<a href="http://seekingalpha.com/article/210314-etf-asset-allocation-for-smart-401ks">MyPlanIQ created SIB portfolios</a> (Simpler Is Better) – market index funds from key asset classes that can be used to measure historical returns to show the impact of asset class selection rather than fund or stock selection. SIB portfolios for different numbers of asset classes are built and used to benchmark returns. From this, conclusions can be drawn as to what is an effective investment strategy for today.
The following funds were used:
<table style="width: 480px;" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td width="200" valign="bottom">
Index Funds Asset Class 
</td>
<td width="53" valign="bottom">
 Ticker 
</td>
<td width="291" valign="bottom">
 Name 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Large Blend
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/vtsmx">VTSMX</a> 
</td>
<td width="291" valign="bottom">
Vanguard Total Stock Mkt Idx 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Foreign Large Blend 
</td>
<td width="53" valign="bottom">
VGTSX 
</td>
<td width="291" valign="bottom">
Vanguard Total Intl Stock Index 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Diversified Emerging Markets
</td>
<td width="53" valign="bottom">
VEIEX 
</td>
<td width="291" valign="bottom">
Vanguard Emerging Mkts Stock Idx 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Real Estate
</td>
<td width="53" valign="bottom">
VGSIX 
</td>
<td width="291" valign="bottom">
Vanguard REIT Index 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Commodities Broad Basket
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/dbc">DBC</a> 
</td>
<td width="291" valign="bottom">
PowerShares DB Commodity Idx Trking Fund 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Intermediate-Term Bond 
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/vbmfx">VBMFX</a> 
</td>
<td width="291" valign="bottom">
Vanguard Total Bond Market Index 
</td>
</tr>
</tbody>
</table>
<table style="width: 480px;" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td width="200" valign="bottom">
ETF Asset Classes 
</td>
<td width="53" valign="bottom">
 Ticker 
</td>
<td width="291" valign="bottom">
 Description 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
LARGE BLEND 
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/vti">VTI</a> 
</td>
<td width="291" valign="bottom">
Vanguard Total Stock Market ETF 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Foreign Large Blend 
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/veu">VEU</a> 
</td>
<td width="291" valign="bottom">
Vanguard FTSE All-World ex-US ETF 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Diversified Emerging Markets
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/vwo">VWO</a> 
</td>
<td width="291" valign="bottom">
Vanguard Emerging Markets Stock ETF 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Real Estate
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/vnq">VNQ</a> 
</td>
<td width="291" valign="bottom">
Vanguard REIT Index ETF 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Commodities Broad Basket
</td>
<td width="53" valign="bottom">
DBC 
</td>
<td width="291" valign="bottom">
PowerShares DB Commodity Idx Trking Fund 
</td>
</tr>
<tr>
<td width="200" valign="bottom">
Intermediate-Term Bond 
</td>
<td width="53" valign="bottom">
<a href="http://seekingalpha.com/symbol/bnd">BND</a>
</td>
<td width="291" valign="bottom">
Vanguard Total Bond Market ETF 
</td>
</tr>
</tbody>
</table>
<a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=5463">Three Asset Class SIB</a>: The three core assets are U.S. and international equities and fixed income. This represents what used to be conventional wisdom: Heavy dependence on the U.S. and the rest of the developed world. With a conservative strategic asset allocation strategy, the portfolio would consist of 60% fixed income and 20% each for U.S. and international equities. With a tactical asset allocation strategy, the fixed income would never be less than 60% but the split of the three asset classes would move based on asset price movement.
<table style="width: 480px;" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td width="120" valign="bottom">
Three Core Asset Portfolios 
</td>
<td width="120" valign="bottom">
 1 year AR 
</td>
<td width="120" valign="bottom">
 3 year AR 
</td>
<td width="120" valign="bottom">
 5 year AR 
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA Index
</td>
<td width="120" valign="bottom">
11%
</td>
<td width="120" valign="bottom">
1%
</td>
<td width="120" valign="bottom">
4%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA ETF Index
</td>
<td width="120" valign="bottom">
15%
</td>
<td width="120" valign="bottom">
1%
</td>
<td width="120" valign="bottom">
3%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA Index
</td>
<td width="120" valign="bottom">
7%
</td>
<td width="120" valign="bottom">
4%
</td>
<td width="120" valign="bottom">
6%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA ETF Index
</td>
<td width="120" valign="bottom">
9%
</td>
<td width="120" valign="bottom">
4%
</td>
<td width="120" valign="bottom">
5%
</td>
</tr>
</tbody>
</table>
The <a href="http://www.myplaniq.com/LTISystem/jsp/strategy/View.action?ID=771"> SAA </a>(buy and hold) strategy represents what many people may end up with. There is little thought put into which asset classes are represented but these are the most likely ones to be covered. The <a href="http://www.myplaniq.com/LTISystem/jsp/strategy/View.action?ID=1003">TAA </a>strategy gives a little higher long term performance because of the ability to move to other asset classes when one aspect of the economy is slowing.
It's clear that world economics has changed; becoming smaller, more interlinked and complex. It's no longer possible to ignore the impact of emerging markets and we are very aware that real estate has an impact on the economy.
If you are just using three asset classes, you should look to upgrade your portfolio immediately.
<a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=5458">Four Asset Class SIB</a>: There are two variants for the four asset class SIB. Either add emerging markets or real estate trusts to the three asset class SIB. Note that the international asset class means established nations such as those in Europe and emerging asset classes are represented by developing nations. With a conservative strategic asset allocation strategy, the portfolio would consist of 60% fixed income and 13.33% each for U.S., international and REIT or emerging market equities. With a tactical asset allocation strategy, the fixed income would never be less than 60% but the split of the three asset classes would move based on asset price movement.
<table style="width: 480px;" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td width="120" valign="bottom">
Four Core Asset Portfolios
</td>
<td width="120" valign="bottom">
 1 year AR 
</td>
<td width="120" valign="bottom">
 3 year AR 
</td>
<td width="120" valign="bottom">
 5 year AR 
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA Em Index
</td>
<td width="120" valign="bottom">
12%
</td>
<td width="120" valign="bottom">
2%
</td>
<td width="120" valign="bottom">
6%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA REIT Index
</td>
<td width="120" valign="bottom">
17%
</td>
<td width="120" valign="bottom">
2%
</td>
<td width="120" valign="bottom">
5%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA ETF Em
</td>
<td width="120" valign="bottom">
16%
</td>
<td width="120" valign="bottom">
2%
</td>
<td width="120" valign="bottom">
6%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA Emerging
</td>
<td width="120" valign="bottom">
11%
</td>
<td width="120" valign="bottom">
7%
</td>
<td width="120" valign="bottom">
10%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA REIT
</td>
<td width="120" valign="bottom">
15%
</td>
<td width="120" valign="bottom">
6%
</td>
<td width="120" valign="bottom">
8%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA ETF Em
</td>
<td width="120" valign="bottom">
15%
</td>
<td width="120" valign="bottom">
7%
</td>
<td width="120" valign="bottom">
11%
</td>
</tr>
</tbody>
</table>
Adding another asset class improves the performance as it balances risk. TAA is also able to increase its long term benefit over SAA as there are more asset classes to move into when one of the asset classes is not performing properly. Choosing between REIT and emerging markets is hard and further diversification is of long term value.
If you are using a four asset class portfolio, you could be doing better. Making the choice between emerging markets and real estate is a tough one.
<a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=5453">Five Asset Class SIB</a>: Has been covered in a previous article and the results are included for completeness. The five class SIB takes both REIT and Emerging markets so is a fusion of the two four asset class SIBs.
<table style="width: 480px;" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td width="120" valign="bottom">
Five Core Asset Portfolios
</td>
<td width="120" valign="bottom">
 1 year AR 
</td>
<td width="120" valign="bottom">
 3 year AR 
</td>
<td width="120" valign="bottom">
 5 year AR 
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA Index
</td>
<td width="120" valign="bottom">
15%
</td>
<td width="120" valign="bottom">
3%
</td>
<td width="120" valign="bottom">
5%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
SAA ETF
</td>
<td width="120" valign="bottom">
20%
</td>
<td width="120" valign="bottom">
3%
</td>
<td width="120" valign="bottom">
7%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA Index
</td>
<td width="120" valign="bottom">
15%
</td>
<td width="120" valign="bottom">
8%
</td>
<td width="120" valign="bottom">
10%
</td>
</tr>
<tr>
<td width="120" valign="bottom">
TAA ETF
</td>
<td width="120" valign="bottom">
19%
</td>
<td width="120" valign="bottom">
8%
</td>
<td width="120" valign="bottom">
12%
</td>
</tr>
</tbody>
</table>
The five asset class SIB is a strong platform for portfolio creation. It has broad diversification and, with tactical asset allocation, good returns.
If you are using a five asset class portfolio, you are in good shape – but take a look at the six asset class portfolio because it will be increasingly important in the current macro economic climate.
<a href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=5464">Six Asset Class SIB</a>: The last asset class adds commodities to the portfolio. This gives another type of asset class and will further help diversification
Adding another asset class does not significantly improve the result within the 5 year time frame. It may be asked whether the extra effort of building and managing a six asset class portfolio is worth it. Broader diversification is good, but is it really necessary? In our view, the addition of commodities will be increasingly important as commodities will protect against inflation as the recovery slowly continues and there is increasing inflationary pressure.
 <img src="http://static.seekingalpha.com/uploads/2010/6/26/649114-127757634454362-MyPlanIQ.jpg" />
<div>
Figure 1 5 Year Annualized Returns for the different SIBs with SAA and TAA strategies
What conclusions can be drawn from this?
<ul>
<li>
 It's time to leave a three asset class portfolio in the past. The world is more connected and complex and higher returns require more sophistication
</li>
<li>
 Four and five asset class portfolios have fared well and show solid returns but everybody should consider adding commodities in the light of the current economic realities
</li>
<li>
This is not rocket science and you should be able to increase your returns and be in control of improving your returns
</li>
<li>
ETF's are a very effective vehicle for implementing a SIB strategy and deliver excellent returns compared to the other funds selected
</li>
</ul>
</div>
</div>
</div>
</div>
</div>
</div>
 Symbols: <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00150'>AGG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BND&amp;count=00160'>BND</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DBC&amp;count=00104'>DBC</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=EEM&amp;count=00121'>EEM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00156'>EFA</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=GSG&amp;count=0079'>GSG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=ICF&amp;count=0092'>ICF</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IYR&amp;count=00112'>IYR</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=LQD&amp;count=0069'>LQD</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SPY&amp;count=00143'>SPY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=TLT&amp;count=0087'>TLT</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00136'>VEU</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=00109'>VNQ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VTI&amp;count=00109'>VTI</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VWO&amp;count=00118'>VWO</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VTSMX&amp;count=005'>VTSMX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VGTSX&amp;count=005'>VGTSX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VEIEX&amp;count=005'>VEIEX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VGSIX&amp;count=006'>VGSIX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VBMFX&amp;count=003'>VBMFX</a> Exchange Tickers: (NYSE: AGG), (NYSE: BND), (NYSE: DBC), (NYSE: EEM), (NYSE: EFA), (NYSE: GSG), (NYSE: ICF), (NYSE: IYR), (NYSE: LQD), (NYSE: SPY), (NYSE: TLT), (NYSE: VEU), (NYSE: VNQ), (NYSE: VTI), (NYSE: VWO), (NYSE: VTSMX), (NYSE:VGTSX), (NYSE:VEIEX), (NYSE:VGSIX), (NYSE:VBMFX)
 Disclosure:
<div>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.</div>
 
 
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National Semiconductor Provides Good Funds in Their Retirement Plan

MidAmerican Energy Company is a domestic operation of MidAmerican Energy Holdings Company, a company of Berkshire Hathaway Inc. (BRK-A). As of 3/30/2011, David Sokol was the CEO of the company.
As many Warren Buffett's Berkshire Hathaway's subsidiary companies, MidAmerican Energy Company has its own 401K retirement plan<a rel="nofollow">: MidAmerican Energy Company Retirement Savings Plan</a>. These plans are different from each other. For example, <a>Berkshire Hathaway Employee Savings and Stock Ownership Plan of General RE</a> and  				 				 				 			 			 				 					<a>Berkshire Hathaway Profit Sharing Plan for Government Employees Companies </a>are the other two plans for General RE and GEICO employees respectively.
the 401K plan consists of 13 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
 
<table style="width: 50%;" border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th align="left">Name</th>
</tr>
</thead>
<tbody>
<tr>
<td width="40%">Stable Value</td>
<td width="40%">STABLE VALUE</td>
</tr>
<tr>
<td width="40%">LARGE VALUE</td>
<td width="40%">JHancock Classic Value I</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="40%">Vanguard Total Stock Mkt Idx Inv</td>
</tr>
<tr>
<td width="40%">Small Growth</td>
<td width="40%">Morgan Stanley Inst Small Co Gr I</td>
</tr>
<tr>
<td width="40%">Foreign Large Value</td>
<td width="40%">Dodge &amp; Cox International Stock</td>
</tr>
<tr>
<td width="40%">Moderate Allocation</td>
<td width="40%">Oakmark Equity &amp; Income I</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="40%">Aston/Montag &amp; Caldwell Growth I</td>
</tr>
<tr>
<td width="40%">Intermediate-Term Bond</td>
<td width="40%">PIMCO Total Return Instl</td>
</tr>
<tr>
<td width="40%">Foreign Large Blend</td>
<td width="40%">iShares MSCI EAFE Index</td>
</tr>
<tr>
<td width="40%">LARGE VALUE</td>
<td width="40%">Russell 1000 Value Index</td>
</tr>
<tr>
<td width="40%">SMALL BLEND</td>
<td width="40%">SSgA Small Cap Instl</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="40%">Russell 1000 Growth Index</td>
</tr>
<tr>
<td width="40%">Intermediate-Term Bond</td>
<td width="40%">SSgA Bond Market Instl</td>
</tr>
</tbody>
</table>
 
The following table shows what major asset classes are covered and what are missing:
 
<table border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th>Number of funds</th>
</tr>
</thead>
<tbody>
<tr>
<td>REITs</td>
<td>0</td>
</tr>
<tr>
<td>Balanced Fund</td>
<td>1</td>
</tr>
<tr>
<td>Fixed Income</td>
<td>3</td>
</tr>
<tr>
<td>Commodity</td>
<td>0</td>
</tr>
<tr>
<td>Foreign Equity</td>
<td>2</td>
</tr>
<tr>
<td>Emerging Market Equity</td>
<td>0</td>
</tr>
<tr>
<td>US Equity</td>
<td>7</td>
</tr>
<tr>
<td>Total</td>
<td>13</td>
</tr>
</tbody>
</table>
 
Like many other company sponsored retirement 401K plans, this plan falls into what we called U.S centric 3-asset class category: it provides coverage to only the three major asset classes. For the US equities class, it provides large growth, large value and large blend style coverage as well as one Small Cap growth fund. On the fixed income side, in addition to the most popular PIMCO Total Return Fund (PTTRX), it provides a low cost SSGA Bond index fund.
In the following, we use two typical asset allocation strategies: strategic and tactical asset allocation strategies (<a rel="nofollow">SAA </a>and <a rel="nofollow">TAA</a>) to study how the plan participants can do.
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 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 <a rel="nofollow">SIB (Simpler Is Better) plan </a>. 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 Mar 30, 2011)
<a rel="lightbox"> </a>
<a rel="lightbox" href="../LTISystem/article_viewchart.action?portfolioID=32548,32549,31628,31631"> <img style="margin: 6px;" src="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=32548,32549,31628,31631" alt="" /></a><a rel="lightbox" href="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=32548,32549,31628,31631"> </a>
<a rel="lightbox"> </a>
Performance table (as of Mar 30, 2011)
<div id="show_Port_div" style="display: block;">
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR </th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr>
<td><a> MidAmerican Energy Company Retirement Savings Plan Tactical Asset Allocation Moderate</a></td>
<td>8%</td>
<td>67%</td>
<td>8%</td>
<td>85%</td>
<td>9%</td>
<td>82%</td>
</tr>
<tr>
<td><a> MidAmerican Energy Company Retirement Savings Plan Strategic Asset Allocation Moderate</a></td>
<td>12%</td>
<td>96%</td>
<td>7%</td>
<td>47%</td>
<td>7%</td>
<td>44%</td>
</tr>
<tr>
<td><a> Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate</a></td>
<td>-1%</td>
<td>-12%</td>
<td>3%</td>
<td>23%</td>
<td>4%</td>
<td>33%</td>
</tr>
<tr>
<td><a> Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate</a></td>
<td>13%</td>
<td>86%</td>
<td>3%</td>
<td>16%</td>
<td>4%</td>
<td>17%</td>
</tr>
</tbody>
</table>
</div>
From the data above, this plan beats the three asset benchmark by virtue of the US asset class choices, indicating good funds covering US stocks, foreign developed country stocks and fixed income.
However, missing coverage on REITs and emerging market stocks, two of the major asset classes for a diversified portfolio contruction, does reduce the diversification effect. Furthermore, the somewhat incomplete offering of various styles in US stocks (for example, small cap value and all mid cap stock styles are missing) would further reduce opportunities to take advantage of varous economic cycles. For example, the following table compares the performance between two tactical asset allocation portfolios, one contructed using funds in <a rel="nofollow">MidAmerican Energy Company Retirement Savings Plan</a>, the other using funds in <a>Berkshire Hathaway Employee Savings and Stock Ownership Plan of General RE, </a>the other subsidiary in Berkshire Hathaway.
<h3>Portfolio Performance Comparison</h3>
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<colgroup><col style="width: 358px;" /><col style="width: 81px;" /><col style="width: 81px;" /><col style="width: 81px;" /><col style="width: 81px;" /><col style="width: 81px;" /><col style="width: 81px;" /></colgroup>
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR </th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td><a>Berkshire Hathaway Employee Savings and Stock Ownership Plan of General RE Tactical Asset Allocation Moderate</a></td>
<td>7%</td>
<td>48%</td>
<td>11%</td>
<td>95%</td>
<td>11%</td>
<td>91%</td>
</tr>
<tr class="odd">
<td><a>MidAmerican Energy Company Retirement Savings Plan Tactical Asset Allocation Moderate</a></td>
<td>8%</td>
<td>67%</td>
<td>8%</td>
<td>85%</td>
<td>9%</td>
<td>82%</td>
</tr>
</tbody>
</table>
To summarize, MidAmerican Energy Company Retirement Savings Plan participants can achieve the best investment returns by adopting asset allocation strategies that are tailored to their risk profiles.
MidAmerican Energy Company Retirement Savings Plan would do well by their employees to consider reviewing their existing funds and adding additional asset classes.
Symbols: <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BRK-B&amp;count=002'>BRK-B</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SPY&amp;count=00135'>SPY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VTI&amp;count=00100'>VTI</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00148'>EFA</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00129'>VEU</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00142'>AGG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=BND&amp;count=00152'>BND</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=AOM&amp;count=0021'>AOM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=CIU&amp;count=00108'>CIU</a>, <a href 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='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=RPV&amp;count=0028'>RPV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SCHV&amp;count=0030'>SCHV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=EFV&amp;count=0032'>EFV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=PID&amp;count=0025'>PID</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DWM&amp;count=0016'>DWM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IVV&amp;count=0049'>IVV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IYY&amp;count=0041'>IYY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IWV&amp;count=0046'>IWV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VV&amp;count=0041'>VV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DLN&amp;count=0043'>DLN</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=RSP&amp;count=0045'>RSP</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SCHX&amp;count=0041'>SCHX</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SHY&amp;count=0082'>SHY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SHV&amp;count=0084'>SHV</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VGSH&amp;count=0015'>VGSH</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=PLK&amp;count=0014'>PLK</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=USY&amp;count=0014'>USY</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IVW&amp;count=0043'>IVW</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IWZ&amp;count=0035'>IWZ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=JKE&amp;count=0032'>JKE</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VUG&amp;count=0044'>VUG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=ELG&amp;count=0031'>ELG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=QQQQ&amp;count=0084'>QQQQ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=RPG&amp;count=0032'>RPG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SCHG&amp;count=0034'>SCHG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IJR&amp;count=0035'>IJR</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IWM&amp;count=00103'>IWM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=JKJ&amp;count=0024'>JKJ</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VB&amp;count=0032'>VB</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DSC&amp;count=0024'>DSC</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=PJM&amp;count=0021'>PJM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DES&amp;count=0024'>DES</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SAA&amp;count=0021'>SAA</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=UWM&amp;count=0021'>UWM</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=SCHA&amp;count=0027'>SCHA</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IJT&amp;count=0020'>IJT</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=IWO&amp;count=0021'>IWO</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=JKK&amp;count=0014'>JKK</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=VBK&amp;count=0025'>VBK</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=DSG&amp;count=0014'>DSG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=PWT&amp;count=0012'>PWT</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=RZG&amp;count=0011'>RZG</a>, <a href ='http://www.myplaniq.com/LTISystem/f401k_symbols.action?symbol=UKK&amp;count=0011'>UKK</a>
 Exchange Tickers: (BRK-B), (BRK-A), (BRK.A), (BRK.B) (SPY), (VTI), (EFA), (VEU), (AGG), (BND), (EEM), (VWO), (IYR), (VNQ)
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.
 
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PTTRX

MidAmerican Energy Company's 401K Plan: More Diversification Needed

Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. Caterpillar was founded in 1925 and is headquartered in Peoria, Illinois.
In this article, w report on <a rel="nofollow" >Caterpillar Inc Investment Trust</a> which is the master trust for Caterpillar's 401k plan.
The investment trust consists of 10 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
The following table lists the asset classes those funds cover:
<table style="width: 50%;" border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th align="left">Name</th>
</tr>
</thead>
<tbody>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="40%">SPDR S&amp;P MidCap 400</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="40%">iShares Russell 1000 Index</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="40%">iShares Russell 1000 Growth Index</td>
</tr>
<tr>
<td width="40%">LARGE VALUE</td>
<td width="40%">iShares Russell 1000 Value Index</td>
</tr>
<tr>
<td width="40%">SMALL BLEND</td>
<td width="40%">iShares Russell 2000 Index</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="40%">iShares Russell 3000 Index</td>
</tr>
<tr>
<td width="40%">High Yield Bond</td>
<td width="40%">JPMorgan High Yield Bond R5</td>
</tr>
<tr>
<td width="40%">Emerging Markets Bond</td>
<td width="40%">JPMorgan Emerging Mkts Debt R5</td>
</tr>
<tr>
<td width="40%">Intermediate Bond</td>
<td width="40%">JPMorgan Bond Instl</td>
</tr>
<tr>
<td width="40%">Foreign Large Blend</td>
<td width="40%">Vanguard Total Intl Stock Index Inv</td>
</tr>
</tbody>
</table>
 
<table border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th>Number of funds</th>
</tr>
</thead>
<tbody>
<tr>
<td>REITs</td>
<td>0</td>
</tr>
<tr>
<td>Balanced Fund</td>
<td>0</td>
</tr>
<tr>
<td>Fixed Income</td>
<td>2</td>
</tr>
<tr>
<td>Commodity</td>
<td>0</td>
</tr>
<tr>
<td>Sector Fund</td>
<td>0</td>
</tr>
<tr>
<td>Foreign Equity</td>
<td>1</td>
</tr>
<tr>
<td>Emerging Market Equity</td>
<td>0</td>
</tr>
<tr>
<td>US Equity</td>
<td>6</td>
</tr>
<tr>
<td>Other</td>
<td>1</td>
</tr>
<tr>
<td>Total</td>
<td>10</td>
</tr>
</tbody>
</table>
As of Mar 25, 2011, this plan investment choice is rated as average based on MyPlanIQ <a rel="nofollow" href="http://www.myplaniq.com/LTISystem/f401k_showplanscorelist.action">Plan Rating methodology </a> 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 (14%) Fund Quality -- Rated as average (61%) Portfolio Building -- Rated as average (60%) Overall Rating: 		average (46%)
<h2>Discussions</h2>
The trust presents an interesting lineup of investment choices: in the U.S. equities, it covers large, mid-cap and small cap stocks. In large cap stocks, it further gives choices in growth and value styles. But it decides to give only mid-cap blend and small blend stock styles to the participants. For international equity, it has only one choice.
On the fixed income side, it is getting more interesting: in addition to a broad base bond index fund (JPMorgan Bond Instl), it gives a high yield (junk) bond fund and an emerging market bond fund, both are at the end of the highest risk spectrum among fixed income (bond) funds.
A natural question to ask is why only those two fixed income funds? How about fixed income funds in other categories such as investment grade corporate bond, long treasury bonds or international bonds. Maybe the reason behind this is that the bond index fund covers most of the short, intermediate term government and corporate bonds. Offering two highest risk bond funds would allow participants to increase their risk premiums.
<h2>Portfolio Discussions</h2>
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 <a rel="nofollow" >SIB (Simpler Is Better) plan </a>. 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 Mar 25, 2011)
The following portfolios are constructed using two typical asset allocation strategies: <a >Strategic Asset Allocation</a> and <a >Tactical Asset Allocation</a>.
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.
<a rel="lightbox" href="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=27556,27559,31628,31631"> <img src="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=27556,27559,31628,31631" /> </a>
Performance table (as of Mar 25, 2011)
<div id="show_Port_div" style="display:block">
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR</th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=27,556"> Caterpillar Inc Investment Trust Tactical Asset Allocation Moderate</a></td>
<td>4%</td>
<td>34%</td>
<td>9%</td>
<td>110%</td>
<td>9%</td>
<td>91%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=27,559"> Caterpillar Inc Investment Trust Strategic Asset Allocation Moderate</a></td>
<td>12%</td>
<td>131%</td>
<td>3%</td>
<td>25%</td>
<td>4%</td>
<td>26%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=31,628"> Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate</a></td>
<td>-1%</td>
<td>-9%</td>
<td>2%</td>
<td>23%</td>
<td>4%</td>
<td>32%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=31,631"> Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate</a></td>
<td>12%</td>
<td>89%</td>
<td>3%</td>
<td>15%</td>
<td>4%</td>
<td>16%</td>
</tr>
</tbody>
</table>
</div>
This plan's Strategic Asset Allocaton moderate portfolio matches the three asset benchmark's one in terms of returns. However, it does have higher Sharpe ratio, indicating the virtue of the US asset class choices and the extra fixed income funds.
The Tactical Asset Allocation moderate portfolio beats its three asset counterpart by a big margin. This again is due to more fund choices in US stocks and fixed income bonds.
Currently Commodities, US Equity and Real Estate are doing well. Only US Equity is available to Caterpillar Inc Investment Trust participants.
To summarize, Caterpillar Inc Investment Trust presents some reasonable investment choices. Some of major asset classes such as REITs and emerging market stocks are missing from the plan. Adding funds to allow exposure to these major assets would allow more diversification and more opportunities to enhance return while reducing risk.
Symbols:<a href ='../../../../LTISystem/f401k_symbols.action?symbol=CAT&amp;count=001'>CAT</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SPY&amp;count=00132'>SPY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTI&amp;count=0095'>VTI</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00146'>EFA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00127'>VEU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00138'>AGG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BND&amp;count=00148'>BND</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=HYG&amp;count=0097'>HYG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JNK&amp;count=0090'>JNK</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PHB&amp;count=0085'>PHB</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=CIU&amp;count=00106'>CIU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BIV&amp;count=0046'>BIV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=GWL&amp;count=0039'>GWL</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PFA&amp;count=0036'>PFA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVE&amp;count=0036'>IVE</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWW&amp;count=0033'>IWW</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKF&amp;count=0026'>JKF</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTV&amp;count=0038'>VTV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=ELV&amp;count=0025'>ELV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PWV&amp;count=0026'>PWV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RPV&amp;count=0026'>RPV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHV&amp;count=0028'>SCHV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVV&amp;count=0045'>IVV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IYY&amp;count=0037'>IYY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWV&amp;count=0042'>IWV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VV&amp;count=0037'>VV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DLN&amp;count=0039'>DLN</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RSP&amp;count=0041'>RSP</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHX&amp;count=0037'>SCHX</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IVW&amp;count=0041'>IVW</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWZ&amp;count=0033'>IWZ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKE&amp;count=0030'>JKE</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VUG&amp;count=0042'>VUG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=ELG&amp;count=0029'>ELG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=QQQQ&amp;count=0082'>QQQQ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=RPG&amp;count=0030'>RPG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHG&amp;count=0032'>SCHG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IJH&amp;count=0026'>IJH</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWR&amp;count=0026'>IWR</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKG&amp;count=0017'>JKG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VO&amp;count=0026'>VO</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=MDY&amp;count=0072'>MDY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EMM&amp;count=0020'>EMM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PJG&amp;count=0017'>PJG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DON&amp;count=0020'>DON</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EZM&amp;count=0020'>EZM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=MVV&amp;count=0016'>MVV</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IJR&amp;count=0033'>IJR</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IWM&amp;count=00101'>IWM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=JKJ&amp;count=0022'>JKJ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VB&amp;count=0030'>VB</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DSC&amp;count=0022'>DSC</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PJM&amp;count=0019'>PJM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DES&amp;count=0022'>DES</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SAA&amp;count=0019'>SAA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=UWM&amp;count=0019'>UWM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SCHA&amp;count=0025'>SCHA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=PCY&amp;count=0032'>PCY</a>,
Exchange Tickers: (CAT),(SPY),(VTI),(EFA),(VEU),(AGG),(BND),(HYG),(JNK),(PHB),(MDY),(IWM),(IWV),(IWW)
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.
 
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The Walt Disney Company (NYSE: DIS), together with its subsidiaries, operates as an entertainment company worldwide. The company?s Media Networks segment includes domestic broadcast television network, television production and distribution operations, domestic television stations, cable networks, domestic broadcast radio networks and stations, and publishing and digital operations. It operates the ABC Television Network and 10 owned television stations, the ESPN Radio and Radio Disney networks, and 46 owned radio stations. The company was founded in 1923 and is based in Burbank, California.
The Walt Disney Hourly Savings and Investment Plan uses Disney's Master Trust. The available investment funds are those in the Master Trust.
<a rel="nofollow" href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=1,119">The Walt Disney Hourly Savings and Investment Plan</a> consists of 28 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
<table style="width: 50%;" border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th align="left">Ticker</th>
<th align="left">Name</th>
</tr>
</thead>
<tbody>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="20%">SMCDX</td>
<td width="40%">Wells Fargo Advantage Mid Cap Dis Inv</td>
</tr>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="20%">FMIMX</td>
<td width="40%">FMI Common Stock</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="20%">AIGOX</td>
<td width="40%">Alger Growth &amp; Income Portfolio I-2</td>
</tr>
<tr>
<td width="40%">ROOT</td>
<td width="20%">CASH</td>
<td width="40%">CASH</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="20%">FDCAX</td>
<td width="40%">Fidelity Capital Appreciation</td>
</tr>
<tr>
<td width="40%">Conservative Allocation</td>
<td width="20%">FTANX</td>
<td width="40%">Fidelity Asset Manager 30%</td>
</tr>
<tr>
<td width="40%">Foreign Large Growth</td>
<td width="20%">FDIVX</td>
<td width="40%">Fidelity Diversified International</td>
</tr>
<tr>
<td width="40%">Retirement Income</td>
<td width="20%">FFFAX</td>
<td width="40%">Fidelity Freedom Income</td>
</tr>
<tr>
<td width="40%">Target Date 2000-2010</td>
<td width="20%">FFFBX</td>
<td width="40%">Fidelity Freedom 2000</td>
</tr>
<tr>
<td width="40%">Target Date 2000-2010</td>
<td width="20%">FFFVX</td>
<td width="40%">Fidelity Freedom 2005</td>
</tr>
<tr>
<td width="40%">Target Date 2000-2010</td>
<td width="20%">FFFCX</td>
<td width="40%">Fidelity Freedom 2010</td>
</tr>
<tr>
<td width="40%">Target Date 2011-2015</td>
<td width="20%">FFVFX</td>
<td width="40%">Fidelity Freedom 2015</td>
</tr>
<tr>
<td width="40%">Target Date 2016-2020</td>
<td width="20%">FFFDX</td>
<td width="40%">Fidelity Freedom 2020</td>
</tr>
<tr>
<td width="40%">Target Date 2021-2025</td>
<td width="20%">FFTWX</td>
<td width="40%">Fidelity Freedom 2025</td>
</tr>
<tr>
<td width="40%">Target Date 2026-2030</td>
<td width="20%">FFFEX</td>
<td width="40%">Fidelity Freedom 2030</td>
</tr>
<tr>
<td width="40%">Target Date 2031-2035</td>
<td width="20%">FFTHX</td>
<td width="40%">Fidelity Freedom 2035</td>
</tr>
<tr>
<td width="40%">Target Date 2036-2040</td>
<td width="20%">FFFFX</td>
<td width="40%">Fidelity Freedom 2040</td>
</tr>
<tr>
<td width="40%">Target Date 2041-2045</td>
<td width="20%">FFFGX</td>
<td width="40%">Fidelity Freedom 2045</td>
</tr>
<tr>
<td width="40%">Target Date 2050+</td>
<td width="20%">FFFHX</td>
<td width="40%">Fidelity Freedom 2050</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="20%">FSTMX</td>
<td width="40%">Fidelity Spartan Total Market Index Inv</td>
</tr>
<tr>
<td width="40%">Intermediate-Term Bond</td>
<td width="20%">PTTRX</td>
<td width="40%">PIMCO Total Return Instl</td>
</tr>
<tr>
<td width="40%">Mid-Cap Growth</td>
<td width="20%">BGRFX</td>
<td width="40%">Baron Growth</td>
</tr>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="20%">CAAPX</td>
<td width="40%">Ariel Appreciation</td>
</tr>
<tr>
<td width="40%">LARGE BLEND</td>
<td width="20%">SEQUX</td>
<td width="40%">Sequoia</td>
</tr>
<tr>
<td width="40%">LARGE GROWTH</td>
<td width="20%">CGRIX</td>
<td width="40%">Calamos Growth I</td>
</tr>
<tr>
<td width="40%">MID-CAP BLEND</td>
<td width="20%">VMCIX</td>
<td width="40%">Vanguard Mid Capitalization Index Ins</td>
</tr>
<tr>
<td width="40%">SMALL BLEND</td>
<td width="20%">RLPHX</td>
<td width="40%">Royce Low Priced Stock Invt</td>
</tr>
<tr>
<td width="40%">SMALL BLEND</td>
<td width="20%">TETIX</td>
<td width="40%">Tamarack Enterprise I</td>
</tr>
</tbody>
</table>
 
The following table shows the number of funds offered in each category.
<table border="0">
<thead>
<tr>
<th align="left">Asset Class</th>
<th>Number of funds</th>
</tr>
</thead>
<tbody>
<tr>
<td>REITs</td>
<td>0</td>
</tr>
<tr>
<td>Balanced Fund</td>
<td>13</td>
</tr>
<tr>
<td>Fixed Income</td>
<td>1</td>
</tr>
<tr>
<td>Commodity</td>
<td>0</td>
</tr>
<tr>
<td>Sector Fund</td>
<td>0</td>
</tr>
<tr>
<td>Foreign Equity</td>
<td>1</td>
</tr>
<tr>
<td>Emerging Market Equity</td>
<td>0</td>
</tr>
<tr>
<td>US Equity</td>
<td>12</td>
</tr>
<tr>
<td>Other</td>
<td>1</td>
</tr>
<tr>
<td>Total</td>
<td>28</td>
</tr>
</tbody>
</table>
The plan offers many solid stock funds including Sequoia (SEQUX), Ariel Appreciation (CAAPX), Baron Growth (CGRIX) and Royce Low Priced Stock (RLPHX). In the fixed income side, it only offers PIMCO Total Return fund (PTTRX),  run by Bill Gross.
As of Mar 22, 2011, this plan investment choice is rated as average based on MyPlanIQ <a rel="nofollow" >Plan Rating methodology </a>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 (26%) Fund Quality -- Rated as average (44%) Portfolio Building -- Rated as average (44%) Overall Rating: average (39%)
The Disney Plan is a typical 401K plan that is U.S. and developed countries centric: it lacks of other major asset exposure including emerging market stocks and real estate investments (REITs). This is reflected in the performance of the following model portfolios that adopt asset allocation strategies: strategic and tactical asset allocation strategies (<a rel="nofollow" href="http://www.myplaniq.com/LTISystem/jsp/strategy/View.action?ID=771">SAA </a>and <a rel="nofollow" href="http://www.myplaniq.com/LTISystem/jsp/strategy/View.action?ID=1003">TAA </a>for participants in Disney's 401K 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.
 
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 <a rel="nofollow" href="http://www.myplaniq.com/LTISystem/f401k_view.action?ID=5,463">SIB (Simpler Is Better) plan </a>. 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 Mar 22, 2011)
<a rel="lightbox" href="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=16947,16953,31628,31631"><img src="http://www.myplaniq.com/LTISystem/article_viewchart.action?portfolioID=16947,16953,31628,31631" /> </a>
Performance table (as of Mar 22, 2011)
<div id="show_Port_div" style="display: block;">
<table id="comparetablePort" class="tablesorter" style="width: 100%;" border="0" cellspacing="1" cellpadding="0">
<thead>
<tr>
<th class="header" width="40%">Portfolio Name</th>
<th class="header" width="10%">1Yr AR</th>
<th class="header" width="10%">1Yr Sharpe</th>
<th class="header" width="10%">3Yr AR</th>
<th class="header" width="10%">3Yr Sharpe</th>
<th class="header" width="10%">5Yr AR </th>
<th class="header" width="10%">5Yr Sharpe</th>
</tr>
</thead>
<tbody>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=16,947">The Walt Disney Hourly Savings and Investment Plan Tactical Asset Allocation Moderate</a></td>
<td>4%</td>
<td>25%</td>
<td>8%</td>
<td>74%</td>
<td>8%</td>
<td>71%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=16,953">The Walt Disney Hourly Savings and Investment Plan Strategic Asset Allocation Moderate</a></td>
<td>6%</td>
<td>61%</td>
<td>6%</td>
<td>40%</td>
<td>6%</td>
<td>36%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=31,628">Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate</a></td>
<td>-2%</td>
<td>-32%</td>
<td>2%</td>
<td>16%</td>
<td>4%</td>
<td>28%</td>
</tr>
<tr>
<td><a href="http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=31,631">Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate</a></td>
<td>10%</td>
<td>69%</td>
<td>3%</td>
<td>13%</td>
<td>4%</td>
<td>14%</td>
</tr>
</tbody>
</table>
</div>
Currently Commodities, Real Estate and US Equity are doing well. Only US Equity is available to The Walt Disney Hourly Savings and Investment Plan participants.
This plan beats the three asset benchmark by virtue of the US asset class choices. If would be a stronger plan with more candidate funds in some missing major asset classes such as emerging market stocks (EEM) (VWO) and REITs (IYR) (VNQ).
To summarize, The Walt Disney Hourly Savings and Investment Plan participants benefit from the strong US stock funds in the plan. But a broader offering would certainly help to improve return and reduce risk.
Symbols:<a href ='../../../../LTISystem/f401k_symbols.action?symbol=DIS&amp;count=001'>DIS</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=SPY&amp;count=00127'>SPY</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VTI&amp;count=0091'>VTI</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EFA&amp;count=00142'>EFA</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VEU&amp;count=00124'>VEU</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=AGG&amp;count=00134'>AGG</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=BND&amp;count=00144'>BND</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=EEM&amp;count=00105'>EEM</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VWO&amp;count=00105'>VWO</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=VNQ&amp;count=0098'>VNQ</a>,<a href ='../../../../LTISystem/f401k_symbols.action?symbol=IYR&amp;count=00101'>IYR</a>,
Exchange Tickers:(NYSE: DIS), (NYSE: SPY), (NYSE: VTI), (NYSE: EFA), (NYSE: VEU), (NYSE: AGG), (NYSE: BND), (NYSE: EEM), (NYSE: VWO), (NYSE: VNQ), (NYSE: IYR)
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.
 
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