401k "only" up 13.5% YTD

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JD2775
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401k "only" up 13.5% YTD

Post by JD2775 » Fri Oct 20, 2017 11:08 am

Sounds ridiculous to say but I feel like this year could have been better. I switched from a Target Retirement Fund (end of last year) that is currently at 17.8% YTD. Sure, it has higher ER (.64 compared to my 5 fund total of .16) so that counts for something. I am much less international than i would have been in the Target Fund. That is the biggest difference I think.

Sorry, no real point to this post....just venting/thinking out loud :) . Is 13.5% "bad" for this year? I don't really have anything to compare it too...

Lafder
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Re: 401k "only" up 13.5% YTD

Post by Lafder » Fri Oct 20, 2017 11:13 am

What was /is the asset allocation for the target date fund vs your current holdings?

I am guessing you increased your bond holdings by going to the individual funds you control.

A few % points don't make that much difference for this year. The real difference is how much less your accounts will drop in the next crash with a higher % bonds !

13.5% sounds pretty good to me. But, it depends what you are comparing it to. What did the same AA Indexes do?

lafder

deltaneutral83
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Re: 401k "only" up 13.5% YTD

Post by deltaneutral83 » Fri Oct 20, 2017 11:16 am

You compare each one of your funds to it's benchmark, if you already use the "benchmark" for each fund and you are getting a competitive ER for each fund then you never really have to wonder as you are getting market returns at the lowest/competitive cost possible. Now if your asset allocation is an issue, that's a separate issue.

JD2775
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Re: 401k "only" up 13.5% YTD

Post by JD2775 » Fri Oct 20, 2017 11:23 am

Thanks for the replies...

The Target Fund has roughly this allocation:

Total Market Stock - 48%
Total International Stock - 31%
Bonds - 21%

My allocation is:

Large Cap 48%
Mid Cap 13%
Small Cap 7%
International Stock 10%
Bonds 22%


I think that International stock is the difference maker as I mentioned. I didnt feel comfortable with it at 31% so I moved it down. Bad timing :)

Tamalak
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Re: 401k "only" up 13.5% YTD

Post by Tamalak » Fri Oct 20, 2017 11:26 am

BOGLE WAS WRONG ABOUT INTERNATIONAL for the last few months I guess

deltaneutral83
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Re: 401k "only" up 13.5% YTD

Post by deltaneutral83 » Fri Oct 20, 2017 11:27 am

I think you have figured out your question. The only real difference is that you reduced your Intl. from 31% to 10%. Since Jan 1, Intl Tot. has gained nearly 23% and the US Total has gained only 15%

aristotelian
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Re: 401k "only" up 13.5% YTD

Post by aristotelian » Fri Oct 20, 2017 11:30 am

13.5% is pretty good, about what I would expect with your portfolio. If you had gone 100% S&P you would have done better, but you would have been taking more risk. If the market crashes tomorrow you will be very happy that you have that 22% in bonds. The last thing you want to do is start chasing return when stocks are already high. Stay the course.

JD2775
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Re: 401k "only" up 13.5% YTD

Post by JD2775 » Fri Oct 20, 2017 11:31 am

Thanks for the replies guys, just wanted some peace of mind. Appreciate it!

ResearchMed
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Re: 401k "only" up 13.5% YTD

Post by ResearchMed » Fri Oct 20, 2017 11:35 am

JD2775 wrote:
Fri Oct 20, 2017 11:23 am
Thanks for the replies...

The Target Fund has roughly this allocation:

Total Market Stock - 48%
Total International Stock - 31%
Bonds - 21%

My allocation is:

Large Cap 48%
Mid Cap 13%
Small Cap 7%
International Stock 10%
Bonds 22%


I think that International stock is the difference maker as I mentioned. I didnt feel comfortable with it at 31% so I moved it down. Bad timing :)
Total bond market has been just about *flat* for the past year, according to the Vanguard website, so that's going to be quite a drag *now*.
OTOH, not too long ago, bond funds did much better (surprising many of us!)... hence the importance of "diversification".

But you can't expect to do the same as the "best asset class" every year. (Even if you tried, you'd need your magical powers to be in the "best asset class" every year.)

We keep noticing the same thing... but then I need to remind myself that we slice and dice, so there will always be some "winners" and some "losers" (or "not so much winners", with some luck).

You might want to use some sort of balanced fund with similar allocations, to see "how you are doing".
And don't just look at a single year.
There will be some good years, hopefully a few great years, and some not so good, for each asset class/fund, as well as "overall".

RM
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Re: 401k "only" up 13.5% YTD

Post by Majormajor78 » Fri Oct 20, 2017 11:57 am

ResearchMed wrote:
Fri Oct 20, 2017 11:35 am

But you can't expect to do the same as the "best asset class" every year. (Even if you tried, you'd need your magical powers to be in the "best asset class" every year.)

We keep noticing the same thing... but then I need to remind myself that we slice and dice, so there will always be some "winners" and some "losers" (or "not so much winners", with some luck).
A good segue to the Callan periodic table. Just looking across that top row of the best performers I don't feel bad about not predicting them at all. All over the place. Not too shocked that small and value beat the S&P last year but it was crushed by high yield bonds! Never would have expected high yield bonds to return 17%

https://www.callan.com/wp-content/uploa ... d_2017.pdf
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ResearchMed
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Re: 401k "only" up 13.5% YTD

Post by ResearchMed » Fri Oct 20, 2017 12:11 pm

Majormajor78 wrote:
Fri Oct 20, 2017 11:57 am
ResearchMed wrote:
Fri Oct 20, 2017 11:35 am

But you can't expect to do the same as the "best asset class" every year. (Even if you tried, you'd need your magical powers to be in the "best asset class" every year.)

We keep noticing the same thing... but then I need to remind myself that we slice and dice, so there will always be some "winners" and some "losers" (or "not so much winners", with some luck).
A good segue to the Callan periodic table. Just looking across that top row of the best performers I don't feel bad about not predicting them at all. All over the place. Not too shocked that small and value beat the S&P last year but it was crushed by high yield bonds! Never would have expected high yield bonds to return 17%

https://www.callan.com/wp-content/uploa ... d_2017.pdf
Thanks for posting that.
I hadn't looked at that Callan Table for a while.
What just struck me just now is how many years "Emerging Markets" were at the very top or very bottom, including several sequential years of bouncing from one extreme to the other (and a few times, then right back again).
Pretty interesting.

RM
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Johnnie
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Re: 401k "only" up 13.5% YTD

Post by Johnnie » Sat Oct 21, 2017 11:49 am

Majormajor78 wrote:
Fri Oct 20, 2017 11:57 am
ResearchMed wrote:
Fri Oct 20, 2017 11:35 am

But you can't expect to do the same as the "best asset class" every year. (Even if you tried, you'd need your magical powers to be in the "best asset class" every year.)

We keep noticing the same thing... but then I need to remind myself that we slice and dice, so there will always be some "winners" and some "losers" (or "not so much winners", with some luck).
A good segue to the Callan periodic table. Just looking across that top row of the best performers I don't feel bad about not predicting them at all. All over the place. Not too shocked that small and value beat the S&P last year but it was crushed by high yield bonds! Never would have expected high yield bonds to return 17%

https://www.callan.com/wp-content/uploa ... d_2017.pdf
Roger all that, similar experience here, and sometimes I can't help laughing at myself: All year long I've been celebrating my "genius" in having a slice-and-dice portfolio with 40 percent international, but in the last week or two I've been gnashing teeth that it's keeping me out of the "US markets set another record" party. :oops: :wink:

Somehow it's less satisfying in such moments to repeat that line about "if at any given moment something in your portfolio isn't making groan then you're not really diversified." <grin>
"I know nothing."

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Re: 401k "only" up 13.5% YTD

Post by z3r0c00l » Sat Oct 21, 2017 12:04 pm

I am at about 15% for my 401K for the year. 70/30 allocation explains much of that, but also consider that the money added during this year has not had full exposure to the gains of the year either, that is significant for those of us early on in the process of saving. Could have been 100% US equities this whole time and made a bundle, but it would have left me very nervous at this point. Slow and steady returns make me more comfortable maxing out 401K.

Dottie57
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Re: 401k "only" up 13.5% YTD

Post by Dottie57 » Sat Oct 21, 2017 12:06 pm

My 401k is up 10%. and I am thrilled given a conservative allocation of 50/50.

DrGoogle2017
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Re: 401k "only" up 13.5% YTD

Post by DrGoogle2017 » Sat Oct 21, 2017 12:08 pm

Mine is up more than 10%, last I checked I was less than 30/70. My AA fluctuates, but no more than 50/50.

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Earl Lemongrab
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Re: 401k "only" up 13.5% YTD

Post by Earl Lemongrab » Sat Oct 21, 2017 12:25 pm

Mine is only up a few percentage points, because it's >90% fixed income. The rest of my portfolio is up much more, and the overall is what I would expect for my allocation.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

tibbitts
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Re: 401k "only" up 13.5% YTD

Post by tibbitts » Sat Oct 21, 2017 12:27 pm

Mine (well, 403b) is up about 3%. Everybody else needs to stop whining.

ResearchMed
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Re: 401k "only" up 13.5% YTD

Post by ResearchMed » Sat Oct 21, 2017 12:29 pm

Johnnie wrote:
Sat Oct 21, 2017 11:49 am
Majormajor78 wrote:
Fri Oct 20, 2017 11:57 am
ResearchMed wrote:
Fri Oct 20, 2017 11:35 am

But you can't expect to do the same as the "best asset class" every year. (Even if you tried, you'd need your magical powers to be in the "best asset class" every year.)

We keep noticing the same thing... but then I need to remind myself that we slice and dice, so there will always be some "winners" and some "losers" (or "not so much winners", with some luck).
A good segue to the Callan periodic table. Just looking across that top row of the best performers I don't feel bad about not predicting them at all. All over the place. Not too shocked that small and value beat the S&P last year but it was crushed by high yield bonds! Never would have expected high yield bonds to return 17%

https://www.callan.com/wp-content/uploa ... d_2017.pdf
Roger all that, similar experience here, and sometimes I can't help laughing at myself: All year long I've been celebrating my "genius" in having a slice-and-dice portfolio with 40 percent international, but in the last week or two I've been gnashing teeth that it's keeping me out of the "US markets set another record" party. :oops: :wink:

Somehow it's less satisfying in such moments to repeat that line about "if at any given moment something in your portfolio isn't making groan then you're not really diversified." <grin>
A perhaps not quite exact quote that I saw recently along these lines was:

"Being fully diversified means always having to say you're sorry." :happy

RM
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asset_chaos
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Re: 401k "only" up 13.5% YTD

Post by asset_chaos » Sat Oct 21, 2017 5:13 pm

As a general benchmark, I keep a M* tracking portfolio for the global total stock/bond markets, approximated with Vanguard index funds and initially weighted with Sharpe's method (https://web.stanford.edu/~wfsharpe/RISMAT/). As of this writing, it's about 57% stocks, has a ytd return of nearly 13%, and stocks are markedly ahead of bond returns ytd. In a ballpark kind of way, a portfolio's ytd expected returns should be higher than this if it has a higher proportion of stocks than global and lower if has a higher proportion of bonds. Idiosyncratic overweights to various subsets of the global market will modify the general expected trend.

The OP's portfolio return seems generally in line with expectations for a reasonably global balanced portfolio. Nothing to get upset or excited about.
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Re: 401k "only" up 13.5% YTD

Post by asset_chaos » Sat Oct 21, 2017 5:20 pm

ResearchMed wrote:
Sat Oct 21, 2017 12:29 pm
"Being fully diversified means always having to say you're sorry." :happy
You don't have to cherry-pick the sorrow. You could also cherry-pick the glee. Well diversified portfolios always contain both the best performing and worst performing segments of the market, no matter how you care to segment the market.
Regards, | | Guy

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Re: 401k "only" up 13.5% YTD

Post by sschullo » Sat Oct 21, 2017 5:35 pm

my 30 stock 70% bond allocation is up 7% YTD, and I am very happy 70-year-old camper! The primary goal of investing is to return enough to meet or beat inflation, pay taxes on distribution and investment costs. So far, 13.5% is great! The only factors under your control are investment costs, stock-bond split and diversification.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

ResearchMed
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Re: 401k "only" up 13.5% YTD

Post by ResearchMed » Sat Oct 21, 2017 5:50 pm

asset_chaos wrote:
Sat Oct 21, 2017 5:20 pm
ResearchMed wrote:
Sat Oct 21, 2017 12:29 pm
"Being fully diversified means always having to say you're sorry." :happy
You don't have to cherry-pick the sorrow. You could also cherry-pick the glee. Well diversified portfolios always contain both the best performing and worst performing segments of the market, no matter how you care to segment the market.
True, but I sort of liked making the point that if one is diversified, *something* (or more than one "something") isn't going to be doing particularly well... and that's *not* necessarily a bad thing.

Indeed, that recognition would help people such as OP.

RM
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Re: 401k "only" up 13.5% YTD

Post by radiowave » Sat Oct 21, 2017 6:29 pm

Right at 11% YTD on 55/45 portfolio.
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TheHouse7
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Re: 401k "only" up 13.5% YTD

Post by TheHouse7 » Sat Oct 21, 2017 6:29 pm

Tamalak wrote:
Fri Oct 20, 2017 11:26 am
BOGLE WAS WRONG ABOUT INTERNATIONAL for the last few months I guess
+1 :D
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

David Scubadiver
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Re: 401k "only" up 13.5% YTD

Post by David Scubadiver » Sat Oct 21, 2017 6:32 pm

I was afraid back in November that the stock market would be a disaster. However, I didn’t want to be out of equities so I took on a very large international exposure figuring I would at worst underperform if the US market continued on Its tear. Turned out I was wrong on both accounts but lucky is better than right.

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Re: 401k "only" up 13.5% YTD

Post by TravelGeek » Sat Oct 21, 2017 6:44 pm

Earl Lemongrab wrote:
Sat Oct 21, 2017 12:25 pm
Mine is only up a few percentage points, because it's >90% fixed income. The rest of my portfolio is up much more, and the overall is what I would expect for my allocation.
Bingo! :sharebeer

I am sure I could look through the collection of funds available in my 401k and be really, really sad. But then my funds in the 401k (and outside) have pretty much done what I selected them for, so really I am pretty happy overall.

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Re: 401k "only" up 13.5% YTD

Post by The Wizard » Sun Oct 22, 2017 12:36 pm

Tamalak wrote:
Fri Oct 20, 2017 11:26 am
BOGLE WAS WRONG ABOUT INTERNATIONAL for the last few months I guess
I don't think Mr. Bogle ever said that domestic stocks would always outperform international. It was more that international stocks just weren't needed...
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