The retiree of 64 has $1 million in her 401(k) common stock fund
, and expects a long life span.
Miletti is a managing director and lead portfolio manager for the PMV Equity team at Wells Capital Management, where she manages the Common Stock Fund
, Intrinsic Small Cap Value Fund, Opportunity Fund and Real Return Fund.
It also expressly froze the Nabisco funds-viz., Nabisco Common Stock Fund
and Nabisco Group Holdings Common Stock Fund-which had been investment options up until then, stopping further purchase but letting participants retain investments they currently owned.
In addition to a fixed or general account, the typical variable annuity might offer the following investment options: (1) growth or common stock fund
; (2) balanced fund; (3) index fund; (4) global fund; (5) bond fund; (6) government securities fund; and (7) money market fund.
The allocation of assets is: 25% in a common stock fund, another 25% in a small- cap fund, 30% in an international fund, and 20% divided evenly between a 2030 target-date fund and a 2040 target-date fund.
I suggest she reallocate her portfolio to 60% in the common stock fund, 10% to 15% in small caps, and 25% to 30% in the international fund.
Lower Transaction Costs - On average, the typical common stock fund incurs about a 4% transactions cost on a round-trip trade.
These funds will generally include a money market fund (see Chapter 1), one or more common stock funds, bond funds, and a fund that specializes in tax-exempt securities.
Both Plans mandated that Citigroup common stock was offered as an investment option but participants were free to invest assets within the Citigroup Common Stock Fund
and between 20 to 40 other investment options.
Although the result has been shown elsewhere, the authors present data to show that currently fewer than five percent of faculty allocate all of their retirement funds to CREF, the common stock fund
. Further, less than one in ten faculty members allocate at least 75 percent of their retirement funds to CREF rather than the alternative bond fund, TIAA.
Bogle uses past rankings of funds to illustrate the difficulty in identifying common stock funds
with superior performance by showing how returns tend to regress towards the mean for all mutual funds.