Ford Motor Company (F) provides savings plan for its employees. The 401K plan consists of 24 funds. These funds enable participants to gain exposure to 4 major assets: US Equity, Foreign Equity, REITs, Fixed Income.
| Asset Class | Ticker | Name |
|---|---|---|
| Retirement Income | STLAX | Barclays Global Investors LP Retire I |
| ROOT | STLBX | Barclays Global Investors LP 2010 I |
| Target Date 2016-2020 | STLCX | BlackRock LifePath 2020 Institutional |
| Target Date 2016-2020 | STLCX | BlackRock LifePath 2020 Institutional |
| Target Date 2026-2030 | STLDX | BlackRock LifePath 2030 Institutional |
| Target Date 2026-2030 | STLDX | BlackRock LifePath 2030 Institutional |
| Target Date 2036-2040 | STLEX | BlackRock LifePath 2040 Institutional |
| Target Date 2036-2040 | STLEX | BlackRock LifePath 2040 Institutional |
| Target Date 2050+ | STLFX | BlackRock LifePath 2050 Institutional |
| LARGE BLEND | VIIIX | Vanguard Institutional Index Instl Pl |
| LARGE GROWTH | FCNTX | Fidelity Contrafund |
| LARGE GROWTH | FDGRX | Fidelity Growth Company |
| MID-CAP BLEND | VIEIX | Vanguard Extended Market Idx Instl |
| SMALL BLEND | NBGIX | Neuberger Berman Genesis Instl |
| SMALL BLEND | RLPIX | Royce Low Priced Stock Instl |
| Global Real Estate | IRGTX | ING Clarion Global Real Estate S |
| Foreign Large Blend | EFA | iShares MSCI EAFE Index |
| FOREIGN SMALL/MID GROWTH | PRIDX | T. Rowe Price International Discovery |
| WORLD STOCK | VTWSX | Vanguard Total World Stock Index Inv |
| Intermediate-Term Bond | VBMFX | Vanguard Total Bond Market Index |
| Intermediate-Term Bond | PTTRX | PIMCO Total Return Instl |
| Inflation-Protected Bond | TIP | iShares Barclays TIPS Bond |
| ROOT | CASH | CASH |
Further classification:
| Asset Class | Number of funds |
|---|---|
| Balanced Fund | 8 |
| REITs | 1 |
| Fixed Income | 3 |
| Commodity | 0 |
| Sector Fund | 0 |
| Foreign Equity | 3 |
| Emerging Market Equity | 0 |
| US Equity | 6 |
| Other | 3 |
| Total | 24 |
The plan’s investment choice is rated as above average based on MyPlanIQ Plan Rating methodology that was designed to measure the effectiveness of the available investment funds. It has the following detailed ratings:
Diversification — Rated as above average (78%)
Fund Quality — Rated as average (57%)
Portfolio Building — Rated as above average (73%)
Overall Rating: above average (70%)
Low cost index funds from Vanguard and others are complemented with some stellar funds such as PIMCO Total Return Instl and Neuberger Berman Genesis Instl.
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 4 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
Fixed Income: AGG or BND
Performance chart (as of Nov 18, 2011)
Performance table (as of Nov 18, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Ford Motors 401K Tactical Asset Allocation Moderate | 5% | 49% | 11% | 103% | 8% | 76% |
| Ford Motors 401K Strategic Asset Allocation Moderate | -0% | -1% | 14% | 93% | 3% | 17% |
| Four Core Asset Index Funds REITs Tactical Asset Allocation Moderate | 7% | 69% | 9% | 82% | 7% | 61% |
| Four Core Asset Index Funds REITs Strategic Asset Allocation Moderate | 1% | 4% | 15% | 76% | 2% | 8% |
This plan beats the four core asset benchmark by virtue of its better fund selection. If would be a stronger plan with more fixed income choices and an additional asset class such as emerging market stocks for plan participants to build a diversified asset allocation portfolio.
In retirement 401K investments, Ford Motor company has a reasonable plan that can be beneficial to its employees.
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.