Very broad diversification with model portfolios for some income
posted 8/12/2020 and linked below
In order of increasing risk ...
- CDs with FDIC protection
- TIPS - Treasury Inflation-Protected Securities
- Fixed Deferred Annuity
- SPIA - Single Premium Immediate Annuity
- Individual IG - Investment Grade Bonds
- UIT - Unit Investment Trust - holding only IG - Investment Grade Bonds
- Mutual Funds holding only fixed income, i.e. not stocks..
Mutual Funds holding only Fixed Income
- Some positive income potential
- Some capital gain potential
- Liquid every business day
- Very broad diversification
- Can potentially be selected for small number of calendar year - CY - losses.
- Possible principle - capital - loss.
- Price typically fluctuates every business day..
- Unlike holding Individual Bonds, either outright or in a UIT, return of principle is typically not a feature.
"Model" Portfolio - Multiple Fixed Income Funds
- Very broad diversification of bond "flavors" - types - issuers - additional factors
- Active bond management has outperformed - see attached article below
- Fund selection, quantity and management recommended or implemented by full time CFA® and other experienced fixed income professionals
- Quarterly rebalancing and quarterly potential fund change recommendations from fixed income professional implemented as appropriate to your situation by your own Financial Advisor / CFP®
- Possible principle - capital - loss.
- Price typically fluctuates every business day.
- This level of sophisticated diversification without undesirable duplication can only be currently achieved to my knowledge by one team, e.g. one sponsor so the funds in the model portfolio are not diversified by sponsor.
The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors should consider their financial ability to continue to purchase through periods of low price levels. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. Exchange traded funds (ETFs) and mutual funds are sold only by prospectus. Investing in ETFs and mutual funds is subject to risk and potential loss of principal. ETFs incur trading and commission costs similar to stocks and frequent trading can negate the lower cost structure of an ETF. There is no assurance or certainty that any investment or strategy will be successful in meeting its objectives. Investors should consider the investment objectives, risks and charges, and expenses of the fund carefully before investing. The prospectus contains this and other important information about the fund. Contact your registered representative of the issuing company to obtain a prospectus, which should be read carefully before investing or sending money. The return and principal value of fixed income securities fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. Guarantees are based on the claims paying ability of the issuer.