We started the year with an allocation of 40-43-17 among Domestic, International, and Bond Funds respectively. As the stock market bottomed in early March, we did a minor reallocation to reach our target allocation of 40-45-15 over the same asset classes. As the stock market rallied during the second-half of this period, we did two other allocation shifts (one in mid May and the other in early June) to reach an allocation of 40-33-27. If the rally continues, we will continue to reduce risk by increasing our bond allocation and vice-versa. Conservative recommendations on bond allocations in retirement portfolios call for that percentage to be the same as your age and so we have further room to go there.
Within our bond portfolio, the allocations are concentrated in two funds – a TIPS (Treasury Inflation Protected Securities) investment in Fidelity Inflation Protected Securities (VIPSX) which accounts for close to 30%, and an investment in PIMCO Total Return Fund (PTTRX) which account for close to 60%. The International allocation is globally diversified – 22% in emerging markets through our investment in Vanguard Emerging Markets ETF (VWO), 14% in Vanguard Pacific Stock Index (VPACX), and the rest in two diversified international funds (FDIVX – 54%, and WBIGX – 9%) focused on large-caps and with heavy concentration in North American & European stocks. The small-cap exposure in the International area is very limited and this is an area for improvement – we are limited by the fact that most of the funds are tied in employer sponsored plans which have only a very limited set of funds to choose from. The domestic stock allocation is somewhat diversified over small, mid, and large cap stocks – 33% in Small Cap Stock Funds through investments in ABF Small Cap Value (AVFIX – ~34%) , Fidelity Small Cap Stock Fund (FSLCX – ~36%), and Fidelity Small Cap Growth Fund (FCPGX – ~30%) , 15% in Mid Cap Stock Funds through investments in Fidelity Low Priced Stock Fund (FLPSX - ~60%) and Artisan Mid Cap Value Fund (ARTMX - ~40%), and the rest in a portfolio of large-cap stock & index funds.
As indicated in our previous update, we also moved out of several smaller funds following the Madoff scare.
Below is our updated portfolio:
| Symbol | % of Portfolio | Fund Fees | Fund Return 2009 YTD (After Fees) | Comments |
| ABF Small Cap Value (AVFIX) | 4.67 | 0.82 | 13.76 | |
| Artisan Mid Cap Value Fund (ARTMX) | 2.32 | 1.21 | 31.39 | |
| Dodge & Cox Stock Fund (DODGX) | 6.45 | 0.52 | 12.52 | A Large cap value fund with a history of outperforming the S&P500 index. Has very low turnover ratio. The fund is very big (~70B) and so outperformance may be harder to come by going forward. |
| Fidelity Diversified International Fund (FDIVX) | 18.00 | 1.00 | 15.11 | Diversified large-cap International growth fund. |
| Fidelity Small Cap Stock Fund (FSLCX) | 4.98 | 0.95 | 32.04 | |
| Fidelity Low Priced Stock Fund (FLPSX) | 3.50 | 0.83 | 19.59 | None. |
| PIMCO Total Return Fund (PTTRX) | 15.14 | 0.52 | 7.39 | Intermediate Term Bond Fund. |
| Vanguard Institutional Index Fund (VINIX) | 2.60 | 0.05 | 9.80 | Attempts to replicate S&P 500 index performance. |
| Miscellaneous Cash/Money Market | 0.30 | 0.00 | 0.00 | None. |
| Calomos Growth A (CVGRX) | 2.96 | 1.22 | 34.50 | A 12B large cap growth fund. The top 10 holdings represent about 27% of assets. |
| Schwab S&P500 Index (SWPIX) | 2.49 | 0.36 | 15.80 | An index fund that tracks the performance of the S&P500 index benchmark. |
| William Blair International Growth (WBIGX) | 2.91 | 1.67 | 32.70 | A 5B large cap international fund with between 10 and 25% exposure to emerging markets. |
| Vanguard Index Trust 500 Index (VFINX) | 2.95 | 0.18 | 9.74 | An index fund that tracks the performance of the S&P500 index benchmark. |
| Vanguard Pacific Stock Index (VPACX) | 4.43 | 0.27 | 10.49 | An index fund that tracks the performance of the MSCI Pacific index benchmark. |
| Vanguard Inflation Protected Securities (VIPSX) | 7.27 | 0.20 | 4.99 | Invests in inflation indexed bonds (primarily US) with maturities between 7 and 20 years. |
| Vanguard Emerging Market ETF (VWO) | 7.18 | 0.25 | 48.00 | None. |
| Fidelity International Real Estate Stock Fund (FIREX) | 0.93 | 0.96 | 21.00 | None. |
| Fidelity Small Cap Growth Fund (FCPGX) | 3.51 | 1.09 | 23.00 | None. |
| Fidelity Select Technology (FSPTX) | 1.79 | 0.88 | 56.00 | A sector specific fund focused on large cap technology stocks with about 2B in assets under management. Top 10 holdings account for 45% of total assets. |
| Fidelity Select Health Care (FSPHX) | 2.03 | 0.87 | 12.12 | A sector specific fund focused on large cap healthcare stocks with about 2B in assets under management. Top 10 holdings account for 38% of total assets. |
| Pension Plan | 3.60 | 0 | 3.70 | Company Fully Vested Cash Balance Pension Plan. |
Related Posts:
1. 401K/IRA Account 2007 Performance Summary - 01/08.
2. 401K/IRA Account – Asset Allocation for 2008 – Part 1.
3. 401K/IRA Account – Asset Allocation for 2008 – Part 2.
4. Retirement Portfolio – Mid Year Update.
5. Asset Allocation Adjustments to Retirement Portfolio in the face of market correction – 10/08.
6. 401K/IRA/Retirement Account 2008 Performance Summary - 01/09.
7. 401K/IRA/Retirement Account 2009 Reallocations - 01/09.
8. 401K & Retirement Accounts Performance - Mid Year 2009 Update - 07/09.
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