(18 points) 401(k) Asset Allocation and Fund Selection
(2 points) Complete the questionnaire at HYPERLINK “http://finance.yahoo.com/calculator/retirement/inv01/”
http://finance.yahoo.com/calculator/retirement/inv01/, click on submit, scroll down to view your result,
select the pdf report, print it and attach your results to the back of this assignment.
(2 points) Answer the questions in the Asset Allocation Questionnaire located in the Assignments folder on
Angel (questionnaire input sheet is first tab in Excel workbook and investment choices for question 8 are in
the second tab). Once you complete the questionnaire, your recommended asset allocation can be found on the
third tab. Print out your results from the third tab and attach them to the back of this assignment.
(8 points) Using your results from both questionnaires combined with your class notes and readings in the
Assignments folder on Angel, come up with an asset allocation for your hypothetical 401(k) that you feel best
fits your risk and return profile. Your final product will have asset categories (i.e., stocks, bonds or cash)
and sectors where appropriate (e.g., US large cap growth) along with a % allocation to each (must add up to
100%).
Once you have determined your asset allocation, go to Vanguard’s website HYPERLINK
“https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc”https://personal.vanguard.com/us/
funds/vanguard/all?sort=name&sortorder=asc and research mutual funds to put in the asset categories and
sectors when appropriate. You will get the most fund choices if you check the closed funds box (they are
eligible for this assignment) and only the $1000 and $3000 boxes in the search area on the left side before
you do your search. You can also search by specific asset class, management and risk.
Feel free to select any fund you want in each asset category and sector. You may also want to put more than
one fund in an asset category. US stocks will most likely have sector allocations (e.g., small cap value) and
you can divide international stocks into developed and emerging if you like. For bonds you might consider
including more than one sector, e.g., high yield, inflation protected securities (TIPS), investment grade,
Treasury or GNMA’s as well as making a call on duration (short, intermediate, long term). Unfortunately,
Vanguard doesn’t have an international bond fund, so for this assignment just combine that allocation with
your US bond allocation.

Explain why you chose the asset allocation and Vanguard funds in part c.

Many 401(k) plans offer participants the option to put some or all of their money in a Target Retirement fund
which does the asset allocation for you. Select a Vanguard Target Retirement fund based on your expected
retirement year and compare its asset allocation to the one you created in question c. How are they different?

 
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