What the experts are doing

Here’s how three fund pros are positioning their own retirement nest eggs:

Don Phillips, Managing director, Morningstar

“I’ve put my 401(k) on autopilot,” says Phillips, who helped launch Morningstar in 1984. Until recently, Phillips had been managing his retirement money the same way most people do: whenever he happened to think about it. “I got to be pretty haphazard about making changes,” he concedes.

Now, Phillips says, he uses Morningstar’s asset allocation service. Company analysts construct the portfolio and rebalance it quarterly. “For the first time in my life, I have fixed-income funds in my portfolio,” for better diversification, Phillips says.

His portfolio has roughly a third of its assets in bonds and two-thirds in stocks, a fairly traditional balanced portfolio. It also has small portions in real estate and hard-asset funds. “I got more conservative,” says Phillips, whose portfolio had been entirely in stocks.

Tony Sagami, Analyst, Money and Markets Web site

Most people, Sagami says, worry only about the return portion of their 401(k) portfolio, trying to earn as much as they can as quickly as they can. But actually, he says, the emphasis “should be not on how to make a bundle, but how to protect a bundle.”

Usually, that’s meant defensive stocks such as utilities and health care funds. But he’s shifted his portfolio to what he calls Defensive 2.0. “You want to be where sales and profits are growing, and that’s on the other side of the Pacific Ocean,” Sagami says. He’s moved his stock holdings to funds that invest in Asia.

Harold Evensky, Financial planner

Evensky manages his financial planning firm’s retirement plan: “We eat our own cooking.”

He takes a balanced approach: about 40 percent in bonds and 60 percent in stocks. “We’ve gradually increased our international holdings to a third of the stock portion of the portfolio,” he says. “I think that’s a very reasonable exposure.”

For his personal IRA, Evensky is invested entirely in Treasury Inflation-Protected Securities, or TIPS, as a low-risk counterpoint to his main investment: his financial planning firm. And he’s not too bothered by how far TIPS prices have risen – and how low their yields have fallen. In March, TIPS yields briefly fell below the rate of inflation.

“It just means you earn a bit under inflation,” Evensky says.