After a one-year absence, the NCAA men’s basketball tournament is back. On Sunday the NCAA selection committee announced the field for the 2021 NCAA men’s basketball tournament. Ready or not, “March Madness” has begun.
The tournament includes 68 teams that will compete in the national championship game on the evening of Monday, April 5th. Virtual office pools and bracket challenges will be the number one e-mail and text message topic over the next three weeks.
Since 1979, most casual of college basketball fans have relied on the seeding process to improve their tournament team picks. Seeding is as a way for the NCAA to make sure the strongest teams do not end up meeting each other too early in the tournament.
Think about the money involved! The NCAA does not want to threaten television ratings and advertising revenues.
A team with a high seed or ranking is the stronger team based upon qualitative and quantitative evaluations. That team often possess more talent and better coaching than the lower-ranked teams. While past performance has certainly not guaranteed future success for all of the high-seeded teams, it is certainly a good starting point for the average fan’s tournament bracket picks.
The NCAA committee has its own proprietary system for ranking teams. The final seeding is based on head-to-head games and overall season performance among other measurements.
Do you realize each mutual fund option on your company 401(k) retirement plan menu can be seeded by investment performance? In technical analysis terms, the process of ranking mutual fund investment performance involves relative strength.
One part of a mutual fund relative strength ranking calculation includes investment performance of a mutual fund versus the overall stock market benchmarks. Another part of mutual fund relative strength ranking calculation includes investment performance of a mutual fund versus a peer group mutual funds in the same asset class.
The more relative strength head-to-head “buy” signals generated by a mutual fund, the higher the “seeding” or ranking on a company 401(k) mutual fund menu. Like the NCAA men’s basketball tournament, history shows top ranked mutual funds perform better than lower ranked ones in both up and down stock markets.
Your company 401(k) retirement plan menu is a fixed universe of mutual funds. A head-to-head investment performance ranking of these mutual funds can more easily help you identify the strongest mutual fund options to own in any given stock market environment.
Mutual fund relative strength ranking finally answers that age-old individual 401(k) investor question of, “What do I buy?”
Diversification should also be part of your 401(k) investment management strategy. Why not diversify your 401(k) account among the handful of highest ranked mutual funds available on your default company 401(k) retirement plan menu?
It might be an improvement on your current “buy-and-hope” investment management strategy.
Admit it. You are going to spend more time filling out your tournament brackets than you have spent watching your company 401(k) account over the last few months.
An independent, third-party investment advisor can provide a current relative strength ranking for the default mutual funds found on your company 401(k) menu. If you don’t have access to an investment advisor with that level of expertise, maybe I can help.
If Charles Schwab is your retirement plan provider, I can send you the mutual fund relative strength ranking for your company 401(k) menu. See my contact information listed below.
Each year there are Cinderella teams and tournament upsets. But the long-term statistical odds are stacked in favor of the higher seeded teams winning the majority of the men’s NCAA tournament games.
Upsets will not preserve and grow your retirement nest egg as much as you need. When you pick your company 401(k) retirement plan mutual funds, stay with the highest seeds.
Ric Lager
763-377-2006
lagerandco@comcast.net
