401(k) plan participants would have major problems if they tried to copy the investment strategies used by investment experts.
That's because the experts' strategies are all over the lot.
And perhaps that's not surprising because the experts differ in age, financial status and risk tolerance.
Here's a snapshot of what Pensions & Investments found:
* R. Theodore Benna, known as the father of the 401(k), is 100% invested in stocks in his profit-sharing plan.
* Mike Henkel, 45, president of Chicago-based Ibbotson Associates, has all of his 401(k) assets in small-cap value and growth equities. Ibbotson offers investment research, asset allocation and consulting for defined contribution plans.
* Tom Johnson, 48, senior vice president of MassMutual Financial Group, Boston, has invested his entire defined contribution plan account in a large-cap value equity fund run by a MassMutual money management subsidiary.
* Robert D. Arnott's 401(k) plan is stock-less. His asset mix is 40% long-duration Treasury inflation-protected securities, 40% long government bonds and 20% junk bonds. Mr. Arnott, 48, is chairman of First Quadrant LP, Pasadena, Calif., an equity manager.
* Dallas L. Salisbury, 53, president and chief executive officer of the Employee Benefit Research Institute, Washington, is also at the other end of the spectrum from Messrs. Benna, Henkel and Johnson. His asset mix is 40% real estate, 10% stocks and 50% bonds - the same allocation since 1999. "The equity market is overvalued. The S&P p/e is between 25 and 45, depending on the method," Mr. Salisbury said. "I'm waiting for 15."
* Hubert L. Harris Jr., 59, CEO of INVESCO Retirement Inc., Atlanta, appears to be the typical balanced investor. His 401(k) and money purchase plan assets are 60% in equities (including company stock) and 40% in fixed income and cash.
* Richard H. Thaler, 58, the Robert P. Gwinn Professor of Behavioral Science and Economics at the University of Chicago, has an allocation of about 50% stocks and 50% TIPS.
* J. Michael Scarborough, 49, president and CEO of The Scarborough Group Inc., Annapolis, Md., has 73% of his assets in equities and 27% in bonds and short-term securities. His firm was the first to offer asset allocation services to plan participants.
* Gerry Mulane, 45, principal at The Vanguard Group, Valley Forge, Pa., has an allocation of 80% stocks and 20% fixed income in his company's 401(k) plan - half passive and half active.
The aggressive side
Mr. Benna's assets are in a hybrid large-cap value fund that includes convertibles, and in three other equity funds.
"Obviously, I'm on the aggressive side for my age," said the 61-year-old Mr. Benna. He expects the stock market to turn around before he begins to withdraw money from his retirement account. "If it doesn't, we're in trouble."
Still, Mr. Benna said, he "stayed away from the tech side, which meant I did not get the runup, but I didn't get the beating either."
Ibbotson's Mr. Henkel, who also has all of his assets in stock, said his 401(k) asset allocation was "embarrassing" until about 18 months ago, when he and his wife "got the ship righted."
After evaluating their entire portfolio, they switched his 401(k) account to 100% actively managed small-cap equities, he said. With the switch, his family's entire portfolio is now 60% stocks, 40% bonds, Mr. Henkel said.
Like Mr. Henkel, MassMutual's Mr. Johnson has an overall asset allocation far different from the 100% exposure to stocks in his defined contribution plans. Overall, 70% of Mr. Johnson's investment portfolio is allocated to stable value, fixed income or cash, and 30% to equities.
"I tend to use square, boring, style-specific investments with long-track-record managers," he said. "That means that in the roaring 1990s I missed some of the upside, but I was breakeven last year, thanks to the stable value I have."
Long term, he seeks a 9% rate of return, Mr. Johnson said, assuming a 3% inflation rate.
INVESCO's Mr. Harris, with his 60/40 split between stocks and bonds, said if he makes any allocation shift this year, it would be to slightly increase his equity exposure. "I believe there will be a rebound in the market," he said.
Making a change
Mr. Thaler, whose portfolio is divided about evenly between stocks and TIPS, was invested solely in equities - both domestic and international - for many years.
"Until 2000, I did not have to rebalance, because I had 100% equities," he said. "I thought there was a positive equity premium. I had a long horizon and so I thought I might as well take it."
In the spring of 2000, however, Mr. Thaler sold half of his equity holdings, investing the proceeds in TIPS.
"They looked too good to be true then, and they were," he said, explaining their return dropped to 2% above inflation from 4.2%.
Although Mr. Thaler does not rebalance every year, he did so recently, when TIPS became overweighted.
Mr. Scarborough, who has about three-quarters of his defined contribution assets in equities, hired his own firm to manage the account a couple of years ago. "I don't have the time and I don't rebalance as I should," he said. "I don't want to have my ego and my emotions involved." Mr. Scarborough's assets are in one of the firm's seven standard portfolios.
"I'm in a balanced growth portfolio of 35% large cap, 10% midcap, 7% small cap, 21% international (about evenly split between value and growth), 17% short-term or government securities and 10% intermediate corporate bonds," he said. "I'm my biggest fan."
He's earned how much?!
Shlomo Benartzi, 34, assistant professor of accounting at The Anderson School at the University of California at Los Angeles, is pondering reallocating his defined contribution plan assets.
"I used to have TIPS because they were great. Now they are no longer great and I have to figure out my next move," said Mr. Benartzi, an expert on behavioral finance.
In the last few years, Mr. Benartzi's earned between 20% and 30% in his defined contribution assets. "That's as good as you can get," he said.