This is the first of three articles where we are going to examine how plan rating can be used to give you additional insight into the properties of a plan (collection of funds) and how they may perform going forward.We have previously examined News Corp's 401K plan. We found that while it was lacking in terms of diversity, it performed well within its scope -- beating the 3 Asset SIB with which it was comparable but losing out to the 4 Asset SIB.
We will now look at the New York Times Company's 401K plan and establish it's performance before comparing the two and examining how each of their ratings gives insight as to their performance. All of MyPlanIQ's plans have ratings so this equally applies to any retirement, taxable, VA, 529 or any other sort of plan.
The New York Times Company, a leading media company with 2009 revenues of $2.4 billion, includes The New York Times, the International Herald Tribune, The Boston Globe, 15 other daily newspapers and more than 50 Web sites, including NYTimes.com,Boston.com and About.com. The Company's core purpose is to enhance society by creating, collecting and distributing high-quality news, information and entertainment.
The New York Times 401K plan consists of 23 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, Emerging Market Equity, Fixed Income. The list of minor asset classes covered:
|Intermediate-Term Bond||DODIX||Dodge & Cox Income|
|Foreign Large Value||DODFX||Dodge & Cox International Stock|
|SMALL BLEND||LRSCX||Lord Abbett Small-Cap Value A|
|LARGE GROWTH||PNOYX||Putnam New Opportunities Y|
|Emerging Markets||EMF||Templeton Emerging Markets Fund|
|LARGE BLEND||VFINX||Vanguard 500 Index Investor|
|Moderate Allocation||VAARX||Vanguard Asset Allocation Adm|
|LARGE GROWTH||VHCOX||Vanguard Capital Opportunity|
|Foreign Large Blend||VWIGX||Vanguard International Growth|
|Target Date 2000-2010||VTOVX||Vanguard Target Retirement 2005|
|Target Date 2000-2010||VTENX||Vanguard Target Retirement 2010|
|Target Date 2011-2015||VTXVX||Vanguard Target Retirement 2015|
|Target Date 2016-2020||VTWNX||Vanguard Target Retirement 2020|
|Target Date 2021-2025||VTTVX||Vanguard Target Retirement 2025|
|Target Date 2026-2030||VTHRX||Vanguard Target Retirement 2030|
|Target Date 2031-2035||VTTHX||Vanguard Target Retirement 2035|
|Target Date 2036-2040||VFORX||Vanguard Target Retirement 2040|
|Target Date 2041-2045||VTIVX||Vanguard Target Retirement 2045|
|Target Date 2050+||VFIFX||Vanguard Target Retirement 2050|
|Retirement Income||VTINX||Vanguard Target Retirement Income|
|LARGE BLEND||REASX||Russell U.S. Core Equity I|
US Equity 6 funds
International Equity 2 funds
Emerging Markets 1 fund
Fixed income 1 fund
Target date 11 funds
If we exclude the target date funds as they can't be used to build a portfolio as they are a portfolio in and of themselves, there are ten funds, six of which are US based.
As of Oct 29, 2010, this plan investment choice is rated as 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 average (64%)
Fund Quality -- Rated as great (90%)
Portfolio Building -- Rated as below average (31%)
Overall Rating: average (59%)
The rating shows the lack of funds to really build a portfolio and that although there are four asset classes, two of them, most notably Fixed income, only have one fund each.
Foreign Equity EFA or VEU
Emerging Market Equity EEM or VWO
Fixed Income AGG or BND
Performance chart (as of Oct 29, 2010)
Performance table (as of Nov 1, 2010)
|Portfolio Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|THE NEW YORK TIMES COMPANIES SUPPLEMENTAL RETIREMENT AND INVESTMENT PLAN Tactical Asset Allocation Moderate||10%||85%||7%||62%||13%||114%|
|THE NEW YORK TIMES COMPANIES SUPPLEMENTAL RETIREMENT AND INVESTMENT PLAN Strategic Asset Allocation Moderate||14%||135%||1%||2%||7%||44%|
|Four Core Asset ETF Index Funds Emerging Markets Tactical Asset Allocation Moderate||4%||36%||4%||34%||14%||90%|
|Four Core Asset ETF Index Funds Emerging Markets Strategic Asset Allocation Moderate||13%||98%||0%||-0%||8%||37%|
The results are mixed in the sense that the NYT portfolios outperform the SIBs in the one and three year categories but underperform the SIBs in the five year categories. The choice of multiple funds in the US and international equity categories will allow for styles rotation to find higher returns. However, in the other major categories there are only single options and the benefits of low fees and market index performance in the SIBs allow it to deliver higher performance.
To summarize having a four asset class portfolio is good. The number of funds in the plan is misleading as the target date funds don't assist in building a portfolio -- if you are a believer in target date funds then you have lots of choices. To further improve the portfolio, it is important to increase the fixed income choices immediately and then balance out emerging market choices from the US choices.
In the next article we will compare News Corp and New York Times to see how the plan rating numbers give insight to the quality of the overall plan.
Disclosure: No Positions