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Show HN: Simplifying 401(k) Advice - Feedback?

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Re: Show HN: Simplifying 401(k) Advice - Feedback?

#41

Post by bradleyjg »

bpm11 wrote: post #16
bradleyjg wrote: post #7

I like the general idea -- many company's 401k options range from slightly sub-optimal to terrible, and helping people make the best of whatever choices they face can be very useful. On the UI/UX side, the look and feel is very slick, but I'd like to see some deeper tutorial type explanations for things like beta and risk profiles rather than short "help" style definitions. More fundamentally, it is hard to garner a…

Thanks, Bradley. Tutorial explanation comment is noted - we have some ideas on that front. There are a few themes that we're playing on with regards to the advice, and we'll try to express them more clearly on the site as we move forward. These are: 1) Most of the investment options available to participants are really a mix of a number of market sectors...for example, Vanguard Wellington ( http://www.kivalia.com/ass…

Thanks for the detailed response.

re: actively managed funds

Even beyond price, it is hard to know exactly what you are getting. A fund may be in the large cap value segment generally, but what if the fund manager hates financials or loves energy? Or even worse what if he hates financials this year, but loved them last year? Trying to diversify properly with such idiosyncratic building blocks seems a frustrating excise.

Re: overall allocation

I noticed that you have three model portfolios based on risk tolerance (conservative, moderate, aggressive) and you measure them versus target date funds as a benchmark. Are those different models intended to account for personal risk tolerance as well as time to retirement?

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#42

Post by PaulHoule »

bpm11 wrote: post #12
PaulHoule wrote: post #4

Who stays in one place enough to have "one" 401(k)? When I switch jobs I roll over. I have rollover, traditional, Roth and SEP IRAs at E-Trade Does your service work for me?

Then you might benefit from the advice we provide that takes advantage of the "no commission" ETF lists at the leading brokers (Fidelity, Schwab, E*Trade, TD Ameritrade) to start. http://www.kivalia.com/blog/ Our advice is applicable in a number of ways.

How do you wind up with a 29% allocation to CYB in a "conservative" allocation?

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#43

Post by bpm11 »

bradleyjg wrote: post #41
bpm11 wrote: post #16

Earlier quoted context omitted.

Thanks, Bradley. Tutorial explanation comment is noted - we have some ideas on that front. There are a few themes that we're playing on with regards to the advice, and we'll try to express them more clearly on the site as we move forward. These are: 1) Most of the investment options available to participants are really a mix of a number of market sectors...for example, Vanguard Wellington ( http://www.kivalia.com/ass…

Thanks for the detailed response. re: actively managed funds Even beyond price, it is hard to know exactly what you are getting. A fund may be in the large cap value segment generally, but what if the fund manager hates financials or loves energy? Or even worse what if he hates financials this year, but loved them last year? Trying to diversify properly with such idiosyncratic building blocks seems a frustrating exci…

A couple thoughts -

re: managed funds or what you're getting in a particular fund. Our style maps for each fund (shown in the bottom right of any fund detail screen) break down how a fund is behaving relative to the overall market, showing % weights in 30 different sectors. Sectors at present are only as granular as small cap growth, emerging markets, international value, etc. but it's a start. We'll make it more granular over time.

Re: Allocations The models will not adjust (ie. decrease beta) like target date funds over time. The various models are meant for personal risk tolerance more than time to retirement.

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#44

Post by bpm11 »

trombs wrote: post #32

Brilliant concept, as I've been struggling with this exact problem for a while. A few comments: Details on how you decide a fund rating would be nice. The "Forecasts that drive our models" doesn't tell me what's really going on. First item: "US Small Cap vs Large". So you're biased toward small cap? That's the implication, but it's not explicit. I'd like to read why. Also, two of the three listed items talk about int…

Currently fund ratings are determined as risk adjusted excess return versus the fund's best fit index. A "C" is average (no curve here!), so you'll find most index funds will be rated C. Funds that have returned more than 3% more on an RAR basis over the past year are deemed A.

We'll want to revisit ratings as we build out - to look at the graphic representation of excess returns in a universe and then customize ratings around reasonable percentiles.

On the +/++ and -/-- portions of the ranking: these are simply momentum scores for the sector in which the fund participates. So, an A++ fund is a manager who is doing well on a risk adjusted basis, in a sector that has strong current momentum.

We'll need to be more explicit on the biases. You're right they don't tell me much. The biases are clearly based on the forecast 10 year returns. At present we are negatively disposed to international generally. You can actually read through our views on the blog: http://www.kivalia.com/blog/post/2013/07/11/Investment-Outlo...

See if that helps.

Will take usability thoughts into account as well. Thanks!

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#45

Post by bpm11 »

PaulHoule wrote: post #42
bpm11 wrote: post #12

Earlier quoted context omitted.

Then you might benefit from the advice we provide that takes advantage of the "no commission" ETF lists at the leading brokers (Fidelity, Schwab, E*Trade, TD Ameritrade) to start. http://www.kivalia.com/blog/ Our advice is applicable in a number of ways.

How do you wind up with a 29% allocation to CYB in a "conservative" allocation?

Interesting catch, Paul. If you look at the plan itself (E*Trade Commission-Free ETFs) there aren't a lot of fixed income options available in the list and all of them seem to be international. So, the first point here is that it's tough to get a truly low-risk, low correlation instrument within this list.

The chinese yuan is an edge case (ie. we don't classify it well because it's currently outside the granularity of our framework - that will change), but if you think about it, probably not a bad choice. The yuan is pegged to the U.S. dollar and has a return (unlike US money market).

So simply, yuan is being used as a U.S. fixed income proxy in this case. The benchmark for the conservative models is about 40% bonds, 60% stocks.

Tell you what you can do - subscribe to the model and add a U.S. treasury ETF (eg. TLT) to the list...then re-run the models. My hunch is you'll find it heavily weighted in the models.

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#46

Post by bpm11 »

PaulHoule wrote: post #38
bradleyjg wrote: post #24

Earlier quoted context omitted.

>Anyhow I'm the kind of guy who buys XIV Daily inverse VIX?!? Have you heard the expression "picking up nickles in front of a steamroller"? Not to mention the cost and tracking error.

If XIV had been around in 2008 it would have taken a sickening drawdown but it would have bounced back much faster than stocks did. It's not "picking up nickles in front of a steamroller" because there isn't any steamroller, unless you are using leverage. If you're using leverage or having to deal with anxious customers, it isn't for you. The tracking error is in your favor because of contango, and that's the reason…

I do like the idea of strategically selling volatility in a portfolio. I've been toying with the idea of adding some of these orthogonal (or nearly so) parameters in the Kivalia framework...as it would be cool to see how a portfolio is positioned with regards to things like vol, momentum, etc.

I'm sure we'll come back to this, but we'll want some stable ETFs to use as factors. Russell had a slew of interesting ETFs but closed them down due to lack of interest.

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#47

Post by [deleted] »

PaulHoule wrote: post #38
bradleyjg wrote: post #24

Earlier quoted context omitted.

>Anyhow I'm the kind of guy who buys XIV Daily inverse VIX?!? Have you heard the expression "picking up nickles in front of a steamroller"? Not to mention the cost and tracking error.

If XIV had been around in 2008 it would have taken a sickening drawdown but it would have bounced back much faster than stocks did. It's not "picking up nickles in front of a steamroller" because there isn't any steamroller, unless you are using leverage. If you're using leverage or having to deal with anxious customers, it isn't for you. The tracking error is in your favor because of contango, and that's the reason…

[deleted]

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#48

Post by bpm11 »

barjo wrote: post #40

Like how you can get the performance rolled back in time. Nice feature that I have never seen before. Makes it feel less of a leap of faith.

that another cool thing about the Kivalia framework. We have time-stapped market views, so we can confidently go back and say "Here's what we would have recommended for your plan 9 months ago".

I think you're obligated to do something like this if you're in any way providing active advice.

Re: Show HN: Simplifying 401(k) Advice - Feedback?

#49

Post by PaulHoule »

bpm11 wrote: post #46
PaulHoule wrote: post #38

Earlier quoted context omitted.

If XIV had been around in 2008 it would have taken a sickening drawdown but it would have bounced back much faster than stocks did. It's not "picking up nickles in front of a steamroller" because there isn't any steamroller, unless you are using leverage. If you're using leverage or having to deal with anxious customers, it isn't for you. The tracking error is in your favor because of contango, and that's the reason…

I do like the idea of strategically selling volatility in a portfolio. I've been toying with the idea of adding some of these orthogonal (or nearly so) parameters in the Kivalia framework...as it would be cool to see how a portfolio is positioned with regards to things like vol, momentum, etc. I'm sure we'll come back to this, but we'll want some stable ETFs to use as factors. Russell had a slew of interesting ETFs b…

I've invested in more than one ETF that has closed.

It would be hard to recommend volatility selling to anybody who you've got a fiducial responsibility for. People really don't like drawdowns.

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