After deciding your stock/bond/cash allocations, you and your advisor can make finer distinctions within each broad category. For example, within the equity category, you could diversify among large-cap stocks, small-cap stocks, and international stocks; and within the bond category, you could separate short-term and long-term bond investments. Since the various investment categories have different characteristics, they generally don’t rise or fall at the same time. Consequently, combining different asset classes can help balance risk and may improve the overall return of a portfolio.
To answer that question, I turned to Morningstar – a leading provider of independent investment research. Here is what Morningstar reported:
Morningstar also noted that Large Blend funds did not make the top five categories, reflecting less investor interest in US Equity funds.
I see a few reasons for inflows into those categories. First, bond funds are an important part of the asset allocation pie, especially among investors nearing retirement where income might trump growth. Second, while US markets have performed very well in 2017, international and emerging markets have performed even better. Should you make a change? Call us to discuss.
Partner, Financial Planner
Mike enjoys getting to know and understand his clients and their needs. Mike guides clients through the financial planning process to help them identify their goals and create a plan to achieve them. His expertise is working with folks nearing retirement and young couples looking to save for retirement and plan for their children’s education. Mike retired from the Air Force in 2014 and went back to school as a non-traditional student at the University of Northern Iowa. He obtained a bachelor’s degree in accounting. Mike is a CERTIFIED FINANCIAL PLANNER™, and a member of the National Association of Personal Financial Advisors, XY Planning Network and Fee Only Network.
