What do you know about your IRA or 401K? – #33

Can you tell me what accounts is your IRA or 401K is invested in? Or do you look at your periodic statements to see if your going up/down or staying even. For the last 10 years the statements looked pretty good following the year 2008 which destroyed many accounts by 30-50% in one of the worst stock-market performances in many a year. Recently our periodic look has seen some phenomenal growth, but then on the last day of November we erased all the market gains for 2018. Very few of us had done anything to anticipate this sudden shift and more often than not we took very little action in terms of adjusting our portfolio. Why is that?

First, we have done very little to familiarize ourselves with what the investment opportunities are in the IRA and 401 portfolios. For all we know, the person heading up the portfolio is a cousin to the broker who specializes in these type of accounts, but we are impressed by the firm that handles this portfolio. As a manager I always suspect but don’t accuse – many a Human Resources Manager and top Management have received added compensation in the forms of dollar kickbacks from the investment companies that handle IRA and 401 accounts. These payments were PERKS to which only a few are entitled. I used to really anger the V.P. of Human Resources by asking him the following question – why doesn’t the name of one of the investment vehicles identified in Category Kings in 10 Investment Realms (WSJ 12/10/18) appear on our statements. He knew I was coming every month/quarter to ask the question, and he would try to circumvent the question with a prepared statement that had been prepared by the investment broker. Yet month/quarters went by and I seldom, if ever, saw the names of these investment vehicles appear. In general, this kind of transparency which should exist, was almost non-existent. In order to make my point as a management lesson, I will provide the names of the following vehicles that have earned the title of Category Kings:

Large-Cap Core

Total
$’sMM Total Return %
Vehicle Name Assets Nov YTD 1y 5y
Jensen Quality Gcl 6572.0 3.0 | 11.7 | 11.8 | 12.6

Small-Cap Core

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Perkins Discovery 22.5 0.9 | 39.0 | 39.5 | 7.0

Large-Cap Value

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
AMG Yacktman F 7484.4 2.6 | 8.0 | 9.9 | 8.7

Small-Cap Value

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
SPDR SSGA US SC 180.1 2.7 | 3.4 | 1.4 | 9.9

Large-Cap Growth

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Dunham Focused LCG 81.2 3.1 | 20.2 | 19.5 | 10.5

Small-Cap Growth

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Alger Small CG Foc:Z 2120.3 1.2 | 27.4 | 26.7 | 13.8

Midcap Core

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
CB Select 210.1 1.6 | 20.4 | 23.7 | 15.1

Multicap Core

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Miller Opportunity 1667.7 2.2 | 10.1 | 11.6 | 9.2

Midcap Growth

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Morgan Stan MCGA 626.4 1.0 | 23.8 | 23.8 | 8.0

Midcap Value

Total
$’sMM Total Return %
Vehicle Name Assets Nov | YTD | 1y | 5y
Transam MCV 1604.5 3.1 | 2.8 | 3.8 | NA

Please use this chart and review your statement to see if any of the Category Kings appear in your statement. Should you have access to the Wall Street Journal 12/10/18 edition you can actually see the numbers on Page:B4. Then establish a transparent look at the IRA & 401Funds that your business is contributing a matching figure and get the employees to invest up to the maximum they can contribute monthly. Get HR involved immediately. I used to ask our students at the beginning of each semester – how many of you max out matching contributions to your employers IRA&401 plans. Young people have no idea of the positive growth opportunities that a tax free plan can have on your future retirement plans. Make sure that your employees have input and that you create the environment that results in all the things you are trying to achieve for them and your business. I will be issuing a BLOG on what role HR should be playing in a business. Your employees are neglected on this very important subject.