Financial Advisor to clergy and religious educators 

JRB Fund Analysis 
The good news is that you have some really good funds to choose from. The not so good news is that there are too many similar funds, some asset classes are not available, determining proper industry allocation is often difficult, and some funds divert from their investment style rather dramatically.

Currently in your JRB Plan, you have:

  • 5 choices of large blend funds
  • 4 choices of large value funds
  • 4 choices of large growth funds
  • 3 choices of world/international funds
  • 2 mid-cap growth funds
  • 2 bond funds (almost entirely government paper)
  • 1 small value fund
  • 1 stock/bond blend fund
Eleven funds have technology as their largest holding.  Two of the three world/international funds have similar country/region exposures.  With so much obvious overlap, how do you select the appropriate fund? Things to consider:
  • investment style and its adherence to that style
  • consistency of returns
  • fund expense
  • manager tenure
  • over/under exposure to various market sectors
  • performance relative to its peers (at least among your plan choices)
Some of the funds are such obvious dogs that youíre better off investing in that investment style/market sector outside your plan where you can select a terrific fund.  But then you have to balance the capital gains/losses it throws off each year and how that affects your taxes.  Still, choosing between a tax-deferred dog and a taxable outside-the-plan winner requires some consideration so the after tax return of the outside-the-plan fund makes it worthwhile.
Asset classes not available in your plan:
  • Corporate high quality bonds
  • Corporate low quality bonds
  • Small company growth funds
  • Commercial real-estate
  • Natural resources
  • Emerging market debt
  • Specific sector funds, i.e., health/medical, technology, financial services, utilities
Without the ability to truly diversify between investment styles, market size, industries, etc., you canít diversify your risk fully.  Modern portfolio theory has proven that proper diversification can achieve the highest total return for a given level of risk.  Since no one can predict which investment style or market/industry sector will perform poorly or well, proper asset allocation achieves less volatility without noticeably sacrificing total return. 

However, the difference between a consistently poorly performing portfolio versus a consistently good performing one can make a dramatic difference in your final dollar amount when looked over a 20-40 year investment horizon. At what point do you modify your allocations because of extreme over/under-performance that puts your allocation plan out of kilter?  How much do you allocate to each fund - a decision mostly based on your comfort level of investment risk, as well as your investment horizon.

Remember, financial planning isnít about trying to beat the market.  Itís about determining your financial goals and then implementing and monitoring a detailed plan for achieving them.  Your investments are just one of the more important aspects of your comprehensive financial plan.

Securities offered through Goldis Financial Group, Inc. 100 Quentin Roosevelt Blvd. Garden City, NY 11530 (516-357-8900), member NASD & SIPC

Dresner Financial Planning Dresner@clergyplanning.com
2359 Salisbury Road Westbury, NY 11590
(888) 200-9670
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