The 401K Diversification Article You MUST Read Today

My earlier Portfolio Diversification – 401K article provides an in-depth example of designing a diversified portfolio. I would urge everyone to read this previous comprehensive article today. It covers:

• MPT (Modern Portfolio Theory)
• Typical funds in corporate 401K plans
• Hard truths about size
• Active funds vrs. index funds
• Fund selection
• Risk Tolerance
• Portfolios by Age and Risk Tolerance
• Re-balancing
• 401k and Diversification Resources

How has my 401K performed?

It has been over a decade since the 401K Portfolio Diversification post; in this time I have regularly re-balanced the 401k account and adjusted it as my age increased.   My 401K has performed in-line with the the market indexes and expectations. In areas where active funds were used rather than index funds; actively-managed Small Cap Funds (SSMVX and successors) have out performed the indexes. Actively-managed Bond Funds and Foreign Stock funds generally have under-performed their indexes.  The under-performance of Bond funds was impacted by the low interest rate environment.

I stuck with my 401K portfolio and am generally pleased with the results over time.