International trouble in your 401k?

I've been harping on why I think you should be out of bond funds for quite some time now.

Here's something else for you to consider.

Do you have any clue how those international funds you're in have been doing?

Well let me clue you in...

On January 28, 2011 the relative strength of EEM, which I use as a proxy for emerging market funds, went negative against the S & P. EEM is the iShares MSCI Emerging Markets Index.

Since that time EEM is down 20.47 percent and VWO, which is the Vanguard MSCI Emerging Markets ETF, is down 19.45 percent. The S & P during this same time period is down 3.23 percent.

My point is that if you are not paying attention to your 401k and have money allocated to the International sector, you are down around 20 percent in that part of your 401k just since January.

Doesn't it make sense to pay attention?

What I like to do with a sector like International, after having pulled my clients out back in January, is to have them start putting in their monthly contribution, which is a small amount, into the International funds on their 401k platform.

That way, you are building up exposure to International on a small scale until the time comes to redeploy money into that sector.