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MyPlanIQ.com is the only web application that offers advanced asset allocation strategies customized to a wide range of retirement and taxable investment plans such as 401(k), IRA and brokerage accounts. The unique key advantages of MyPlanIQ.com are 1. Superior investment strategies with high... More
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  • ATT Dials Up A Mediocre Plan 0 comments
    Dec 30, 2010 9:34 AM | about stocks: T, SPY, VTI, EFA, VEU, AGG, BND, HYG, JNK, PHB, AOM, CIU, BIV, AOR, AOA, GWL, IDHQ, IVE, IWW, JKF, VTV, PWV, RPV, SCHV, IVV, IYY, IWV, VV, DLN, RSP, SCHX, IVW, IWZ, JKE, VUG, QQQ, RPG, SCHG, IJH, IWR, JKG, VO, MDY, RSCO, PXMC, DON, EZM, MVV, IJR, IWM, JKJ, VB, PXSC, DES, SAA, UWM, SCHA, IJK, IWP, VOT, PXMG, RFG, UKW
    The AT&T Long Term Savings and Security Plan (Plan) is a defined contribution plan established by AT&T Corp. (ATTC) to provide a convenient way for eligible non-management employees of participating ATTC companies to save on a regular and long-term basis.

    We now analyze the AT&T Long Term Savings and Security Plan We will discuss the investment choices and present the plan rating by MyPlanIQ. AT&T and Wal-Mart have similar plans that are restricted in terms of asset classes but we will compare the two as they both Fortune top ten companies.

    The ATT 401K plan consists of 25 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.

     

    Asset Class Ticker Name
    Intermediate-Term Bond VBMFX Vanguard Total Bond Market Index
    Mid-Cap Growth RPMGX T. Rowe Price Mid-Cap Growth
    LARGE BLEND VTSMX Vanguard Total Stock Mkt Idx
    World Allocation RIRFX American Funds Capital Inc Bldr R5
    Foreign Large Blend VGTSX Vanguard Total Intl Stock Index
    Foreign Large Blend INLBX Morgan Stanley International B
    ROOT CASH CASH
    LARGE BLEND LMNVX Legg Mason Value Instl
    LARGE VALUE VWNFX Vanguard Windsor II
    World Allocation PAUIX PIMCO All Asset All Authority Inst
    LARGE GROWTH VWUAX Vanguard U.S. Growth Adm
    Moderate Allocation USBSX USAA Balanced Strategy
    SMALL BLEND TRSSX T. Rowe Price Instl Small-Cap Stock
    Moderate Allocation PAAIX PIMCO All Asset Instl
    Intermediate-Term Bond FBIDX Fidelity U.S. Bond Index
    LARGE BLEND VTSMX Vanguard Total Stock Mkt Idx
    LARGE BLEND VFINX Vanguard 500 Index Investor
    MID-CAP BLEND VEXMX Vanguard Extended Market Idx
    LARGE GROWTH FMAGX Fidelity Magellan
    Foreign Large Blend VGTSX Vanguard Total Intl Stock Index
    LARGE BLEND FDGFX Fidelity Dividend Growth
    MID-CAP BLEND FLPSX Fidelity Low-Priced Stock
    High Yield Bond SPHIX Fidelity High Income
    Foreign Large Growth FDIVX Fidelity Diversified International
    HYBRID ASSETS T AT&T Inc

    The list of minor asset classes covered:
    Foreign Large Blend: EFA, VEU, GWL, PFA
    High Yield Bond: HYG, JNK, PHB
    Hybrid Assets:
    Intermediate-term Bond: AGG, CIU, BIV, BND
    Large Blend: IVV, IYY, IWV, VTI, VV, SPY, DLN, RSP, SCHX
    Large Growth: IVW, IWZ, JKE, VUG, ELG, QQQQ, RPG, SCHG
    Large Value: IVE, IWW, JKF, VTV, ELV, PWV, RPV, SCHV
    Mid-cap Blend: IJH, IWR, JKG, VO, MDY, EMM, PJG, DON, EZM, MVV
    Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
    Moderate Allocation: AOM
    Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
    World Allocation: AOR, AOA

     

    Asset Class ATT Funds Wal-Mart Funds
    REITs 0 0
    Balanced Fund 4 2
    Fixed Income 3 4
    Commodity 0 0
    Sector Fund 0 0
    Foreign Equity 4 4
    Emerging Market Equity 0 0
    US Equity 12 6
    Other 2 0
    Total 25 16


    We note that the plans are similar in nature with the main difference being in more choices in US and balanced funds. 

    As of Dec 23, 2010, this plan investment choice is rated as above average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

    Diversification -- Rated as above average (77%)
    Fund Quality -- Rated as average (50%)
    Portfolio Building -- Rated as above average (79%)
    Overall Rating: above average (70%)

    Portfolio Discussions

    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical 3 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    US Equity: SPY or VTI
    Foreign Equity: EFA or VEU
    Fixed Income: AGG or BND

    Performance table (as of Dec 23, 2010)

    Currently Commodities, US Equity and Emerging Market are doing well. Only US Equity is available to AT&T Long Term Savings and Security 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 fixed income choices and an additional asset class.

    We now compare the ATT and Wal-Mart plans.

     Performance table (as of Dec 23, 2010)

    As anticipated, the additional fund choices in the asset classes allow the ATT plan to squeeze out an extra point in the TAA although it's too close to call with SAA.

    To summarize, both AT&T and Wal-Mart would benefit their employees by adding an extra asset class such as emerging markets or real estate. They both have similar performance but ATT just wins out by virtue of more fund choices.
     

     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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