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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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  • Wyndham Delivers a Strong Five Asset Class Retirement Plan 0 comments
    Jan 28, 2011 2:18 PM | about stocks: XLY, IYZ, XLI, XLB, XLK, XLE, XLF, XLP, XLU, XLV, SPY, QQQ, IWM, MDY, EFA, VEU, EEM, VWO, IYR, ICF, VNQ, GSG, DBC, DBA, USO, LQD, CSJ, CIU, HYG, JNK, PHB, TLT, IEF, SHY, SHV, BND, AGG, MUB, MBB

    Wyndham Worldwide is one of the world's largest hospitality companies offering individual consumers and business-to-business customers a broad suite of hospitality products and services including lodging, vacation exchange and rental services, and vacation ownership interests in resorts. Wyndham Worldwide is headquartered in Parsippany, N.J., and is supported by more than 25,000 employees around the world.

    The Wyndham Worldwide Employee Savings Plan consists of 27 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Emerging Market Equity, REITs, Fixed Income.

     
    The list of minor asset classes covered:
    Diversified Emerging Mkts: EEM, GMM, PXH, DEM, SCHE
    Equity: VTI, VT
    Foreign Large Growth: EFG
    Foreign Large Value: EFV, PID, DWM
    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
    Mid-cap Growth: IJK, IWP, VOT, EMG, PWJ, RFG, UKW
    Mid-cap Value: IJJ, IWS, JKI, VOE, EMV, PWP, RFV, UVU
    Moderate Allocation: AOM
    Multisector Bond: AGG, GBF, BND, LAG
    Real Estate: IYR, ICF, VNQ
    Small Blend: IJR, IWM, JKJ, VB, DSC, PJM, DES, SAA, UWM, SCHA
    Small Growth: IJT, IWO, JKK, VBK, DSG, PWT, RZG, UKK
    Target Date 2000-2010: TZD
    Target Date 2011-2015: TZE
    Target Date 2016-2020: TZG
    Target Date 2021-2025: TZI
    Target Date 2026-2030: TZL
    Target Date 2031-2035: TZO
    Target Date 2036-2040: TZV
    Target Date 2041-2045:
    Target Date 2050+:

     

    Asset Class Number of funds
    Balanced Fund 10
    REITs 1
    Fixed Income 2
    Commodity 0
    Sector Fund 0
    Foreign Equity 2
    Emerging Market Equity 1
    US Equity 10
    Other 1
    Total 27

    This is a well designed plan -- not too many funds but five asset classes make this plan understandable with the ability to put together a five asset class portfolio that should deliver good risk adjusted returns.

    The US choices give a good selection of size -- perhaps a few more value alternatives.

    Asset Class Ticker Name
    Small Growth ALSAX Alger SmallCap Growth A
    LARGE GROWTH PAPIX Allianz CCM Capital Appreciation Instl
    LARGE GROWTH RGAFX American Funds Growth Fund of Amer R5
    LARGE BLEND NYVTX Davis NY Venture A
    Mid-Cap Growth HAMGX Harbor Mid Cap Growth Instl
    SMALL BLEND HASCX Harbor Small Cap Value Instl
    Mid-Cap Growth OTCIX MFS Mid-Cap Growth I
    MID-CAP VALUE PYCGX Pioneer Mid-Cap Value Y

    Adding more fixed income choices and another emerging market alternative would strengthen the plan still further.

    Multisector Bond                  LBNDX    Lord Abbett Bond-Debentur
    Intermediate-Term Bond    PTTRX    PIMCO Total Return Instl


    The two choices are good but a high yield bond choice would also be good.

     As of Jan 27, 2011, 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 (84%)
    Fund Quality -- Rated as average (51%)
    Portfolio Building -- Rated as great (90%)
    Overall Rating: above average (77%)

    2010 was a good year for equities -- especially in the US and 2011 starts with risk chasing evident. Despite this, we may see subdued market: stocks are not cheap. Investors should keep a cool head and manage their portfolios systematically. Plans with access to emerging markets, real estate and commodities are likely to benefit along with the assumed staple of US equities. Plans will also want to have an array of bond choices as the current market conditions challenge established assumptions as to what is safe.

    Don't get carried away with exuberance and make sure that your portfolios are diversified and you watch the fundamental trends..

    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 5 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
    REITs: IYR or VNQ or ICF
    Emerging Market Equity: EEM or VWO
    Fixed Income: AGG or BND
    Performance chart (as of Jan 27, 2011)

    Performance table (as of Jan 27, 2011)

    Currently Commodities, US Equity and Real Estate are doing well. US Equity and Real Estate available to Wyndham Worldwide Employee Savings Plan participants.

    This plan beats the five 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.

    To summarize, Wyndham Worldwide Employee Savings Plan gives the participant good asset class and reasonable fund choices. Trading one or two of the US choices for bond, REIT and emerging market alternatives would be a nice to have.

    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



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: XLY, IYZ, XLI, XLB, XLK, XLE, XLF, XLP, XLU, XLV, SPY, QQQ, IWM, MDY, EFA, VEU, EEM, VWO, IYR, ICF, VNQ, GSG, DBC, DBA, USO, LQD, CSJ, CIU, HYG, JNK, PHB, TLT, IEF, SHY, SHV, BND, AGG, MUB, MBB
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