401K Investments: Ford Motor Company Has a Good Plan for Its Employees
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 [...]

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 ClassTickerName
Retirement IncomeSTLAXBarclays Global Investors LP Retire I
ROOTSTLBXBarclays Global Investors LP 2010 I
Target Date 2016-2020STLCXBlackRock LifePath 2020 Institutional
Target Date 2016-2020STLCXBlackRock LifePath 2020 Institutional
Target Date 2026-2030STLDXBlackRock LifePath 2030 Institutional
Target Date 2026-2030STLDXBlackRock LifePath 2030 Institutional
Target Date 2036-2040STLEXBlackRock LifePath 2040 Institutional
Target Date 2036-2040STLEXBlackRock LifePath 2040 Institutional
Target Date 2050+STLFXBlackRock LifePath 2050 Institutional
LARGE BLENDVIIIXVanguard Institutional Index Instl Pl
LARGE GROWTHFCNTXFidelity Contrafund
LARGE GROWTHFDGRXFidelity Growth Company
MID-CAP BLENDVIEIXVanguard Extended Market Idx Instl
SMALL BLENDNBGIXNeuberger Berman Genesis Instl
SMALL BLENDRLPIXRoyce Low Priced Stock Instl
Global Real EstateIRGTXING Clarion Global Real Estate S
Foreign Large BlendEFAiShares MSCI EAFE Index
FOREIGN SMALL/MID GROWTHPRIDXT. Rowe Price International Discovery
WORLD STOCKVTWSXVanguard Total World Stock Index Inv
Intermediate-Term BondVBMFXVanguard Total Bond Market Index
Intermediate-Term BondPTTRXPIMCO Total Return Instl
Inflation-Protected BondTIPiShares Barclays TIPS Bond
ROOTCASHCASH

Further classification:

Asset ClassNumber of funds
Balanced Fund8
REITs1
Fixed Income3
Commodity0
Sector Fund0
Foreign Equity3
Emerging Market Equity0
US Equity6
Other3
Total24

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 Name1Yr AR1Yr Sharpe3Yr AR3Yr Sharpe5Yr AR5Yr Sharpe
Ford Motors 401K Tactical Asset Allocation Moderate5%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 Moderate7%69%9%82%7%61%
Four Core Asset Index Funds REITs Strategic Asset Allocation Moderate1%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.

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