401k Portfolio Update and Re-Allocation

By | March 1, 2006

I have only three funds in the account: a S&P500 Index fund, an Utilities fund, and an Emerging Markets fund. My returns for year to date is 8.6%, and for the past twelve months is 27%. Those numbers are pretty impressive.

Zooming in to the one-month performance, the emerging markets and utilities fund returns is negative. Both of the funds has had a stellar 12-month run. The utilities fund had a 18% return and the emerging market fund had a whopping 41% return. I’m afraid this year, both of the funds may slow down or even turn around. To protect my profits, I’m going to reallocate my portfolio.

After going through a list of funds and their fund facts I’ve found two new funds I like. They are the Fidelity Advisor High Income Advantage and the T. Rowe Price Growth Stock Fund.
I like the story of the T. Rowe Price Growth Stock Fund and I’m going to move all of my S&P 500 Index fund money to it. The Growth fund long term track record is better than the S&P 500’s. Also, I’m betting that the large cap growth companies are going to do well in the near future. The Fidelity Advisor High Income Advantage is a very nice bonds fund and should be a good protection against down markets.

This how my 401k portfolio will look:

Current Allocation
Emerging Markets 53%
Utilities 38%
S&P 500 9%

New Allocation
Emerging Markets 35%
Utilities 35%
Growth 21%
High Yield Bonds 9%

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