Finding Income And Growth In A Rough Market

multi asset fruitAs they open their monthly statements, investors will see proof of how May and June were tough months, especially for the bond market.

We’ll explore some of the quarter’s winners and losers, and discuss specific strategies in our quarterly Market Wrap sent to clients, but for investors in general, it’s still an ongoing challenge to find income and growth in an increasingly volatile market.

Reshma Kapadia just wrote an excellent article on the subject, The New Breed of Income Fund, in the July 6 Barron’s. She focuses on so-called “multi-asset” income funds, which seek higher income flows for investors, but without giving up on growth. We think she’s on to a good thing.  Two of the funds profiled are on our “favorites” list, and we have been pleased to purchase them on a no-load (no-commission) basis for client portfolios for several years.

Here’s another thing the author has got right. As investment advisors, we’re going further afield to uncover promising income investments for client portfolios, and are using a more broadly diversified range of products and approaches.

Writes Kapadia, “Financial advisors are using, on average, 12 investment vehicles to generate income for clients, according to a survey by Cogent Research, a market-research and consulting firm.” If in times gone by, it was merely a matter of picking out one or two bond or equity-income funds, those days are long over.

We occasionally get asked by clients why we use multiple funds or strategies instead of just buying a good ‘ole bond index. (It’s easy to understand where the question comes from. Despite what consumers read in the popular financial press, the solution to today’s income challenge is not buying a pre-packaged bond index paying little and chock full of government bonds).

In a world of 0% interest rates, there’s a lot more fine-tuning involved today to try to get the right amount of yield (or income), the right amount of growth, and the acceptable level of risk. That approach isn’t easily satisfied by using a computer-driven ETF or index. Usually part of the solution is what Kapadia calls the “multi-asset” fund with a skilled human being calling the shots.

“It’s a time-honored tradition to diversify sources of yield,” says Steve Bodurtha, head of investments for Citi Private Bank, North America, as quoted by Kapadia. “And, boy, that has never been more true.”


About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!


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