Performance Optimization
History has shown that there is often an inverse correlation between investment expense and performance, but this is especially true when evaluating the various share classes of the same investment vehicle. So, beyond the expense efficiencies that can be gained by utilizing a less expensive share class – the corresponding performance is likewise better.
| Historical Annual Total Return | ||||||
| Investment Option | Ticker | 2015 | 2014 | 2013 | 2012 | Morningstar Rating |
| AmFunds Washington Mutual R2 | RWMBX | (0.91) |
10.35 |
30.95 |
11.68 |
|
| AmFunds Washington Mutual R3 | RWMCX | (0.51) |
10.82 |
31.46 |
12.09 |
|
| AmFunds Washington Mutual R6 | RWMGX | 0.12 |
11.53 |
32.34 |
12.85 |
|
However, the simple fact is that every investment manager is known for a unique set of specialties, whereby their research and investment management style lends itself to a certain investment style. For example, a firm that is known for its prowess in growth equity investments is not likely to have similar expertise in fixed income investments. Similarly, a firm known for their strength in international investing may not have like skill in managing domestic investments.
So, when evaluating investments for performance optimization, you must compare investments that follow the same investment strategy or share a common investment objective. This can be done in a variety of ways, but the simplest is to compare investment alternatives that share a common investment category and style – versus using just one attribute; whereby you can be comparing apples-to-apples.
Fund Category: Large Cap Value
| Historical Annual Total Return | ||||||
| Investment Option | Ticker | 2015 | 2014 | 2013 | Exp Ratio | Morningstar Rating |
| DFA US Large Cap Value III |
DFUVX | 10.19 |
40.60 |
22.17 |
0.27% |
|
|
Vanguard Value Index | VWNDX | 11.82 |
36.08 |
20.78 |
0.08% |
|
|
Dodge & Cox Stock |
DODGX | 10.40 |
40.55 | 22.01 |
0.52% |
|
|
Putnam Equity Income Y |
PEIYX |
12.73 |
31.94 |
19.31 |
0.73% |
|
|
T. Rowe Price Value |
TRVLX |
13.37 |
37.31 |
19.46 |
0.84% |
|
| AmFunds Wash Mutual R6 | RWMGX |
11.53 |
32.34 |
12.85 |
0.30% |
|
As a result, Fi401k can provide side-by-side comparisons of the various investment alternatives that share the same asset class/fund category as your plan’s current investment option; whereby almost any plan can find an available investment alternative that may have demonstrated stronger historical performance.