A bi-weekly publication from Consultiva Internacional, Inc. (Registered Investment Adviser)
As reported recently in the Wall Street Journal, an investor used to get a 7.5% return from a 100% bond portfolio 20 years ago. Today, thanks to low interest rates in the U.S., negative rates in Europe and Japan, and slower than expected growth in developed and developing economies, a return that size takes a much more volatile mix. Research from Callan Associates shows that in 2015 achieving strong returns meant spreading money across risky assets, shrinking bond holdings and allocating up to 78% of investment dollars, into stocks, real estate and private equity. Back in February, Consultiva shared its projected allocations for 2016 at the “Pursuit of 8%” annual investor meeting and showed that a 7.5% return needs an asset allocation strategy that shall include a high dose of global stocks and alternative investments, leaving little room for bonds. In today’s markets a 100% fixed income portfolio is estimated to yield between 1.4% and 4.96%. Bonds historically produced a source of safe income streams, but low interest rates have impacted that scenario, and investors have had to compensate by betting on riskier assets, and adjusting investment objectives and risk tolerance levels.
by Myrna Rivera, CIMA®
Founder & Chief Executive Officer
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Consultiva is a Registered Investment Adviser. The registration with the Securities and Exchange Commission does not imply a certain level of skill or training. Consultiva has compiled the information for this report from sources Consultiva believes to be reliable. Sources include: investment manager(s); mutual fund(s); exchange traded fund(s); third party data vendors and other outside sources. Consultiva assumes no responsibility for the accuracy, reliability, completeness or timeliness of the information provided, or methodologies employed, by any information providers external to Consultiva. Conclusions reflect the judgement of Consultiva Investment Strategy Committee at this time and is subject to change without prior notice. There also can be no guarantee that using this information will lead to any particular result. Past performance results are not necessarily indicative of future performance. Diversification does not guarantee a profit or protection against loss. This document is for informational purposes only and is not intended to be an offer, solicitation, recommendation with respect to the purchase or sale of any financial investment/ security or a recommendation of the services supplied by any money management organization neither an investment advice or legal opinion. Investment advice can be provided only after the delivery of Consultiva’s Brochure and Brochure Supplement (ADV Part 2A and 2B) once a properly executed investment advisory agreement has been entered into by a client and Consultiva. This is not a solicitation to become a client of Consultiva. There are risks involved with investing including the possible loss of principal. All investments are subject to risk. Investors should make investment decisions based on their specific investment objectives, risk tolerance and financial circumstances. . Global and international investments may carry additional risks that are generally not associated with U.S. investments, such as currency fluctuations, political instability, economic conditions and varying accounting standards. Annual, cumulative, and annualized total returns are calculated assuming reinvestment of dividends and income plus capital appreciation.