This article is part of a series of case studies we are conducting for various 401K plans. In this article, we will discuss how participants in NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM can achieve reasonable investment results using asset allocation strategies. We will also discuss how those portfolios are positioned in today's market environment.
National Semiconductor Corporation, a semiconductor company, designs, develops, manufactures, and markets analog and mixed-signal integrated circuits and sub-systems. It is one of the oldest semiconductor companies in Silicon Valley.
NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM's 401K plan consists of 30 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income. Three Core Asset ETF Benchmark's 401K plan consists of 3 funds. These funds enable participants to gain exposure to 3 major assets: US Equity, Foreign Equity, Fixed Income.
| The list of minor asset classes covered by NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM | The list of minor asset classes covered by Three Core Asset ETF Benchmark |
|---|---|
| Foreign Large Blend: FSIIX, RERFX Foreign Large Value: DODFX Inflation-protected Bond: VAIPX Intermediate-term Bond: FTHRX, WACPX, VBTIX Large Blend: FUSEX, NYVRX Large Growth: FCNTX Large Value: DODGX Mid-cap Blend: FLPSX Mid-cap Growth: JMGRX Mid-cap Value: LAVLX Moderate Allocation: FPUKX Retirement Income: VTINX Small Blend: HSVRX Small Growth: SMPDX, RSEGX Target Date 2000-2010: VTENX, VTOVX, VTOVX, VTOVX, VTOVX Target Date 2016-2020: VTWNX Target Date 2026-2030: VTHRX Target Date 2036-2040: VFORX Target Date 2050+: VFIFX Other: CASH, CASH |
Foreign Large Blend: VEU Intermediate-term Bond: BND Large Blend: VTI |
| Asset Class | NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM | Three Core Asset ETF Benchmark | ||
|---|---|---|---|---|
| Balanced Fund | 11 | 0 | ||
| Fixed Income | 4 | 1 | ||
| Sector Fund | 0 | 0 | ||
| Foreign Equity | 3 | 1 | ||
| US Equity | 10 | 1 | ||
| Other | 2 | 0 | ||
| Total | 30 | 3 |
As of Apr 1, 2011, NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM investment choice is rated as above average and Three Core Asset ETF Benchmark investment choice is rated as poor 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:
| Attribute | NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM | Three Core Asset ETF Benchmark | ||
|---|---|---|---|---|
| Diversification | average (53%) | poor (2%) | ||
| Fund Quality | average (64%) | below average (22%) | ||
| Portfolio Building | great (86%) | poor (5%) | ||
| Overall Rating | above average (69%) | poor (10%) |
The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies (SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical 3 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
Fixed Income: AGG or BND
Performance chart (as of Apr 1, 2011)
Performance table (as of Apr 1, 2011)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM Tactical Asset Allocation Moderate | 9% | 88% | 9% | 108% | 10% | 101% |
| NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM Strategic Asset Allocation Moderate | 11% | 124% | 5% | 39% | 6% | 43% |
| Three Core Asset ETF Benchmark Tactical Asset Allocation Moderate | -1% | -10% | 3% | 31% | 4% | 36% |
| Three Core Asset ETF Benchmark Strategic Asset Allocation Moderate | 12% | 88% | 3% | 16% | 4% | 19% |
Currently Commodities, US Equity and Real Estate are doing well. Only US Equity is available to NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM participants.
Even though National Semiconductor plan falls into what we call 'U.S. centric' catogories because of the only three asset classes it covers (U.S. equity, Foreign equity and fixed income), it compensates its lack of diversification by its excellent fund choices. In the large cap U.S. stock categoriy, it provides
Davis New York Venture A (NYVRX) -- Large-cap blend
Dodge & Cox Stocks (DODGX) -- Large-cap value
Fidelity Contrafund (FCNTX) -- Large-cap growth
All of them are excellent funds. In the mid cap category, it again has its three styles covered by high quality funds. These include
Fidelity Low Priced Stocks (FLPSX) -- Mid-cap blend
Lord Abbett Mid-Cap Value (LAVLX) -- Mid-cap value
Janus Funds Enterprise (JMGRX) -- Mid-cap growth
Three small cap funds are provided for small cap stocks. In foreign stock category are American Funds Euro-Pacific (RERFX) and Dodge & Cox Foreign Stocks (DODFX), both are well known and solid performers.
To summarize, NATIONAL SEMICONDUCTOR CORPORATION RETIREMENT AND SAVINGS PROGRAM participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. The company could further expand its fund coverage to other major asset classes such as emerging market stocks to allow better diversification.
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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Exchange Tickers: (nsm), (SPY), (VTI), (EFA), (VEU), (AGG), (BND), (AOM), (CIU), (BIV), (GWL), (PFA), (IVE), (IWW), (JKF), (VTV), (ELV), (PWV), (RPV), (SCHV), (EFV), (PID), (DWM), (TZD), (TZG), (TZL), (TZV), (IVV), (IYY), (IWV), (VV), (DLN), (RSP), (SCHX), (IVW), (IWZ), (JKE), (VUG), (ELG), (QQQQ), (RPG), (SCHG), (IJJ), (IWS), (JKI), (VOE), (EMV), (PWP), (RFV), (UVU), (IJH), (IWR), (JKG), (VO), (MDY), (EMM), (PJG), (DON), (EZM), (MVV), (IJR), (IWM), (JKJ), (VB), (DSC), (PJM), (DES), (SAA), (UWM), (SCHA), (IJK), (IWP), (VOT), (EMG), (PWJ), (RFG), (UKW), (IJT), (IWO), (JKK), (VBK), (DSG), (PWT), (RZG), (UKK), (TIP)
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