What about Emerging Markets down 14.6% in 2015?

I recently ran across a 401(k) plan that did not provide an emerging markets fund for employees who wish to build their own portfolio with individual funds. Many conventional 401(k) providers focus on making sure that the funds in the plan have excellent recent track records. (Even though past performance is not a reliable indicator of future performance  as is diversification and low expense ratio.) Since Emerging Markets were down not just in 2015 but also 2011, 2013 and 2014 perhaps the “advisor” servicing that plan decided they would skip an entire asset class since it would show poor numbers when they reviewed part performance? Is skipping an entire asset class a good idea? As you look at the MSCI Emerging Markets Index from 1988 – 2015, it was down 13 of 28 years – geez – why would you bother with that?  Another good reason not to have it in the 401k plan? The S&P500 in contrast was down only 5 of those same 28 years. Gotta love that S&P500. But, wait a minute, what about the “Lost Decade” – 2000-2009 when the S&P500 had an annualized return of -0.9%. During the Lost Decade,  Emerging Markets rolled with a +10.1% annualized return. Nice! I bet many 401k owners would have loved to have a nice chunk of their assets in Emerging Markets during the Lost Decade! (So many had their assets concentrated in S&P500 because they “understand” it. Concentration is the opposite of diversification and is our enemy as smart common sense investors.) But what about this entire period of 1988 -2015 when 13 of 28 years were negative for...

New DOL Rule Just Issued April 6, 2016

On April 6, the Department of Labor (DOL) published the final watered-down version of the conflict-of-interest rule it proposed in April 2015. The new regulations require those who advise on retirement savings plans to move somewhat closer to adhering to the “fiduciary standard” our firm has long held dear. Because we’ve always been fiduciaries, these regulations won’t affect our relationships with 401k plan sponsors or individual clients with retirement accounts. Despite their efforts to derail the plan, Wall Street’s broker-dealers didn’t win this time! As an employer who offers a qualified retirement plan or an individual whose advisor oversees my individual retirement account, how will this new rule affect my relationship with my advisor? If you have chosen to work with a fiduciary advisor and investment manager like O’Reilly Wealth Advisors LLC you are fortunate and your relationship will not change. Your advisor already is held to the highest standard and committed to doing what is best for you, your plan and its participants. A Securities Attorney’s Opinion: Andrew Stoltmann, a Chicago securities attorney, quoted at wealthmanagement.com said, “It’s a watered-down version of what many of us thought would be a stringent fiduciary duty. There are carve-outs and holes in this rule that you could drive a pretty big Mack truck through.” Why was this regulation proposed? The DOL fiduciary rule was proposed to better protect people who are saving for retirement as a result of changes in the investment environment. Over the past 40 years, the availability and importance of self-managed investments, such as IRAs and participant-directed retirement plans, has increased. At the same time, the number and...