QikReview: Large-Cap Funds - American, Dodge & Cox, Putnam, State Street

I was asked to review 401(k) funds for a particular retirement account. In the subsequent series of posts, I've listed reviews of the available funds, my subjective grade for these funds, and my suggested allocation into these funds. In my reviews, "Rating" refers to the Morningstar rating of these funds. These reviews are starting with Large-Caps and then moving on to Foreign Large-Caps, Mid-Caps, Moderate Allocation, and ending with High-Yield Bond and Small-Growth funds.

American Funds Growth (HVRBX)

Category: Large Growth
Rating: Not Rated
Capital Gains Exposure: -
Assets: $0.093 bil
Expense Ratio: 0.88%
Turnover Ratio: N/A
Yield: N/A
Redemption Period: 0 days
Redemption Fee: 0%
3-Year Total Cost: $281
Minimum Investment: $0.0
Comments: This fund has just been created in May, 2008. Naturally, it has already lost about 35%. So, not only does it have an extremely short track record, that records also happens to be horrible. It invests into Giant (42), Large (33), and Medium (22) companies. This fund invests into the following sectors Software (5), Hardware (10), Healthcare (8), Consumer Services (9), Business Services (8), Financials (8), Industrial Materials (20), and Energy (20). 100% of this fund's assets are invested into American Funds Ins Ser Growth, fund which I have not been able to find on Morningstar.
Grade: E

Dodge & Cox Stock (DODGX)

Category: Large Value
Rating: 4
Capital Gains Exposure: -39%
Assets: $36.200 bil
Expense Ratio: 0.52%
Turnover Ratio: 27%
Yield: 2.12%
Redemption Period: 0 days
Redemption Fee: 0%
3-Year Total Cost: $167
Minimum Investment: $2,500
Comments: It invests into Giant (51), Large (37), and Medium (11) companies. This fund invests into the following sectors: Hardware (13), Media (12), Healthcare (25), Consumer Services (7), Financials (14), Consumer Goods (5), Industrial Materials (10), and Energy (8). The fund holds 82 stocks and 277 bonds; it has 25% of assets in the top ten holdings. I prefer more concentrated portoflios, but this fund does hold many solid stocks - among it's top picks are Novartis, Wells Fargo, WellPoint, GE, and Shlumberger. This fund ranks in the top 2% in it's category for the 10-year period while in the middle of the pack for other time periods. This fund's portfolio is identical to the Dodge & Cox Balanced stock portfolio except for the lack of bonds. I don't think bonds allocation will be helpful from point on until we are close to next bull market's pick, hence the slighly higher grade.
Grade: B+

Putnam Equity Income (PEYAX.LW)

Category: Large Value
Rating: 4
Capital Gains Exposure: N/A
Assets: $2.330 bil
Expense Ratio: 0.98%
Turnover Ratio: 73%
Yield: 2.17%
Redemption Period: 7 days
Redemption Fee: 1%
3-Year Total Cost: $908
Minimum Investment: $500
Comments: This fund invests into Giant (46), Large (30), and Medium (20) companies. It invests into the following sectors: Hardware (6), Telecom (8), Healthcare (12), Financials (27), Consumer Goods (9), Industrial Materials (10), Energy (18), and Utilities (5). This fund has 99 holdings and keeps 35% of assets in the top ten holdings. This fund performs relatively well with a ranking in the top 25% percentile and delivering 3.26 over the 10-year period. In addition to okay performance it's also very expensive for its caregory.
Grade: D

State Street Equity 500 Index Service (STBIX)

Category: Large Blend
Rating: 3
Capital Gains Exposure: -22%
Assets: $0.167 bil
Expense Ratio: 0.70%
Turnover Ratio: 12%
Yield: 2.57%
Redemption Period: 0 days
Redemption Fee: 0%
3-Year Total Cost: $311
Minimum Investment: $25,000,000
Comments: This fund tracks S&P 500 companies. Index fund concept is good, but this fund charges higher than average fee for a simple index fund.
Grade: C

Full List of Current Series of 401(k) Fund Reviews:

• Introduction and Large-Cap Funds - American Funds Growth, Dodge & Cox Stock, Putnam Equity Income, State Street Equity 500 Index Service
• Foreign Large-Cap Funds - AllianceBernstein International, American Funds EuroPacific Growth
• Mid-Cap Funds - Alger MidCap Growth Institutional, Ariel
• Moderate Allocation Funds - Dodge & Cox Balanced, George Putnam Fund of Boston
• Goldman Sachs High Yield, Morgan Stanley Institutional Small Growth
• Fund Picks and Allocation Targets