This company stock SHS does not have a positive 5yr Sharpe ratio and the Balanced portfolio has the stable value fund SVF.hpx in the scan as its largest holding. The employee portfolio has a less than 3% invested in the stock which is up 134% YTD typical of its high volatility which kills compounding. All in all a good plan with the Schwab Target Date funds represented in the scan by the US Government Lifecycle funds L2010, L2020, L2030 and L2040.
The Balanced portfolio for this plan invested 9.5% of the plan in company stock FLS which has positive 5yr and 10yr Sharpe ratios. The largest holding of that portfolio is the Vanguard stable value fund VRST at 38.1% of the portfolio. The employee portfolio has 13.8% invested in company stock and the stable value fund is their largest holding as of 12-31-2009 as well. The 3D scan provides the Balanced portfolio asset allocation and it has 12 investment options. This is a good plan and the employee's did much better than most the last 5yrs.
This year the Balanced portfolio includes a few more investment options but the 5yr perfomance is about the same and the GIC is still the largest holding. The employee portfolio invested 8.7% in company stock ATI which has a nice return but is very volatile. That increased their risk a lot and their return a wee bit. The plan has many self directed investment options that are not in the scan. Only options with 5% or more and the target date funds are in the scan and VFITX is a proxy for Blackrock's intermediate bond fund.
The Balanced portfolio this year has a few Target Date funds but it is still a lifeboat portfolio. The employee portfolio has 22.7% of their money in company stock CSC which hurt their return. The Mellon Capital Mangement SMA funds are MCM.dlx, MCM.elx, and MCM.mcx in the scan and the SSgA Target date funds were represented by US Government 401k Lifecycle funds. This plan could use a makeover.
This Chart forecasts how often a $1M portfolio might be lost. I am testing the Chart format.
The plan was helped greatly by company stock OXY as it was last year . The big difference in the scan Balanced portfolio this year is the inclusion of a large GIC which is the largest holding. Last year it was company stock. The employee portfolio has 51.6% of their money invested in the stock producing a 5yr APR = 14.90% with low risk and positive Sharpe ratio of 0.79. Thats too much for a retiree in my opinion and year-to-date in 2010 the stock is down -0.53% as the oil and gas industry has been hit with several expensive and very public problems. All in all a good plan with a very good stock option.
Last year this plan's Balanced portfolio was 100% invested in the GIC. This year after a good market in 2009 the Balanced portfolio has 8 investment options and the GIC has only 71.9% of the portfolio. Company stock GT had a great 2009 but is still too volatile to be in the Balanced portfolio. It has a negative 5yr Sharpe ratio of -0.045 and is down -27.59% YTD in 2010. Like several other plans the GT plan now limits company stock investments to 10% and this year the employee portfolio has 8.6% invested in the stock.
The Balanced portfolio is up over last year for the same 401k index investment options. They are discussed in a ELS TechNote 2009-5 that can be downloaded from this site and they are summarized here;
