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Portfolio Allocation
Old 08-07-2008, 07:54 PM   #1
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Portfolio Allocation

I really need some help to manage my 401K portfolio which is distributed as under:
Pimco Total Return Administration PTRAX5.39%
American Funds Washington Mutual A AWSHX 24.04%
MFS Massachusetts Investors Gr Stk A MIGFX 24.25%
Munder Mid-Cap Core Growth A MGOAX-3.80%
ICM Small Company ICSCX 7.93%
Hartford SmallCap Growth HLS IB HBSG X-5.08%
American Funds EuroPacific Gr A AEPGX 11.78%
Fidelity Diversified International FDIVX 11.60%
Lazard Emerging Markets Equity Open LZOEX 6.13%

This has not done too well this year...any help in redistribution will be appreciated....Thanks
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Old 08-07-2008, 08:12 PM   #2
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Mutual funds have not performed well for anyone over the last few months. Don't know much about the funds you show but the below link is a good starting point to do some reading. I would probably allocate as shown in their pie chart.

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Old 08-07-2008, 08:28 PM   #3
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The overall US market is about 75% large cap and 25% mid and small cap (17% mid and 8% small I think).

My suggestion would be to do the allocation in 3 layers-

1) define a general risk profile
pick a percent stocks and percent bonds.

100% stocks is aggressive (good if you will be invested for 25+ years)
80% stocks/20% bonds is moderately aggressive
60% stocks/40% bonds is moderate
40% stocks/60% bonds is capital preservation

2) take the equity portion and decide % domestic stocks and % foreign stocks
might be 75% domestic and 25% foreign stocks
might be 50% domestic stocks, 30% foreign stocks and 20% bonds
you get the idea

3) then take each equity and bond position and divide it up

% large cap domestic
% mid cap domestic
% small cap domestic
% large cap foreign
% small cap foreign
% emerging markets
% domestic bonds
% foreign bonds

then plug the funds in

The asset allocation has more to do with the returns than the actual funds you pick.

My allocation:
97% stocks 3% bonds (slowly rebalancing to 90-10).
72% domestic stocks/25% foreign stocks

42% domestic large cap
15% domestic mid cap
15% domestic small cap
15% foreign large cap
5% foreign small cap
5% emerging markets
3% bonds (a fund of funds which holds about 15% foreign bonds, 15% dividend paying stocks and 70% domestic bonds which includes government, corporate, high yield and real estate bonds)
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Old 08-08-2008, 08:52 AM   #4
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Simplify - just pick one of those target retirement funds (from Vanguard, Fidelity or T. Rowe Price) that matches your planned retirement date.
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Old 08-08-2008, 09:16 AM   #5
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Originally Posted by Spanky View Post
Simplify - just pick one of those target retirement funds (from Vanguard, Fidelity or T. Rowe Price) that matches your planned retirement date.
BWAHAHAHA! That's terrible advice! Sam has got some pretty nice choices in there, and you're recommending a target portfolio?
A) he'll do much better overall by diversifying
B) it doesn't even look like he has any of the options you've mentioned.

Sam, call up whoever is managing the plan and ask them to sit down with you and advise. You're paying for that service.
BTW, don't judge the funds on one year performance.
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Old 08-08-2008, 09:33 AM   #6
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I don't think the discussion is complete without examining the expense ratios of the available funds. A Boglehead approach would be to find the cheapest desired funds within the 401(k), then complete your asset allocation within IRA and taxable accounts, where you have more control over expenses.
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Old 08-08-2008, 09:39 AM   #7
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What jIMOH said is the probably the most important step in setting up your portfolio. It all depends on how long your timeframe is for appreciation (more risk for longer timeframe) and what your general risk tolerance is (appreciation or preservation or bond/dividend growth). After that, you break down your asset allocation into the different classes of funds that you need, and only then do you need to choose what funds are appropriate for you... active vs. index, etc.
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Old 08-08-2008, 09:41 AM   #8
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If only people around here put as much effort into evaluating the money they spent on meals as they did their mutual funds......
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Old 08-08-2008, 09:48 AM   #9
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If only people around here put as much effort into evaluating the money they spent on meals as they did their mutual funds......
Yogurt parfaits are still $1 at McDonalds
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Old 08-09-2008, 11:58 PM   #10
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Quote:
Originally Posted by Art G View Post
BWAHAHAHA! That's terrible advice! Sam has got some pretty nice choices in there, and you're recommending a target portfolio?
A) he'll do much better overall by diversifying
B) it doesn't even look like he has any of the options you've mentioned.

Sam, call up whoever is managing the plan and ask them to sit down with you and advise. You're paying for that service.
BTW, don't judge the funds on one year performance.
Are you implying target-dated retirement mutual funds are not diversified? How do you know that these funds are not available? OP did not mention what other funds are accessible. Nevertheless, target funds offer instant diversification into stocks and bonds, as well as automatically shift to a more conservative blend as one near your target retirement date.

It may be true that you can beat these funds with some effort. For a busy person, these funds are great.
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Old 08-11-2008, 11:17 AM   #11
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For a busy person?? He's on an investment board so apparently he's got enough time to take an interest in his retirement. Ohhh, nevermind.
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