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Bonds
For smaller investment portfolios, we typically use low-cost bond mutual funds or exchange traded funds (ETFs) to develop the fixed income asset allocation. For clients with a fixed income component of $300,000 or more, we work with the Fixed Income Department of BAM Advisor Services to acquire investment grade municipal, Treasury and federal agency bonds. These bonds can be acquired for our clients at significantly lower mark-ups than from traditional brokers.
Our fixed income investment management is based upon the following principles and issues:
The role of fixed income within a portfolio is typically to
(1) reduce overall portfolio risk,
(2) provide an ongoing, reliable income source, or
(3) provide a combination of both. Does your fixed income investment policy reflect your individual investment goals and priorities?
Do your fixed income holdings adhere to the same disciplined investing principles that we recommend for all of your investment decisions? Are they managed using tax and cost saving measures?
Do you have access to objective, knowledgeable recommendations regarding security selection or fund selection?
Our status as a Registered Investment Advisor rather than as a broker-dealer, plus our fee-only cost structure, means we cannot and will not add mark-up fees on bond purchases. Mark-ups are the principle way that brokers are compensated, and these hidden costs are often significant. Our fee-only approach eliminates the potential conflict of interest in our purchase recommendations and enables us to acquire and sell bonds at the lowest possible cost.
We recommend "laddered" or "bullet" strategies depending upon the client's investment objectives. We generally avoid making predictions based upon future interest rates believing that such forecasts are inherently unpredictable.
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