Fixed income has historically performed two roles within an investment program: income and risk control. It serves as the ballast within a balanced portfolio consisting of riskier assets such as equities and commodities. The challenge that investors face today is that the playbook from the last several decades may very well look different from the upcoming decade, one which may see higher interest rates becoming the new normal. However, for investors desiring high inflation-adjusted income without taking too much credit or interest rate risk, one option is the 3D Fixed Income ETF Portfolio.
The 3D Fixed Income ETF Portfolio seeks current income across global fixed income markets. The strategy’s investment objective is to provide long-term superior risk-adjusted returns over the broad investment grade universe. The strategy is structured to be a diversifying component to riskier strategies such as equities and commodities within a risk-based asset allocation program.
The 3D Fixed Income ETF Portfolio uses a dynamic asset allocation approach that blends the benefits of long-term investing with the flexibility to position around significant market-moving events. The strategy will target a core, intermediate-maturity risk profile and can opportunistically invest in higher yielding, riskier fixed income sectors should the valuations more than compensate for the perceived embedded risks. It is built upon time-tested investment themes afforded by the market as compensation for taking on risks above that of just holding cash securities and will allocate to actively managed strategies where there is a strong rationale to do so.
The 3D Fixed Income ETF Portfolio will primarily invest in fixed income ETFs across the U.S. market, although it has discretion to invest in non-U.S. fixed income, on a U.S. dollar-hedged or unhedged basis. The strategy will not invest in equity ETFs with high dividend yields that may behave like fixed income surrogates (for example utilities and REITs). The strategy will target an intermediate duration risk profile with respect to interest volatility and will maintain a portfolio-weighted investment grade rating as measured by nationally recognized rating agencies.
Freedom Investment Management offers a wide spectrum of investment solutions for our advisors, including the 3D Model series with a 17-year history of simplifying the management of portfolios by combining complementary investment funds into one single diversified portfolio managed to targeted risk profiles and time horizons. Our portfolios can offer significant diversification benefits, liquidity, lower investment costs, tax-efficiency, and greater simplicity whether you’re seeking a core investment strategy or a complete managed portfolio.
Data source: Morningstar
Performance figures for individually listed third-party models are for illustrative purposes only and do not reflect the platform fee. A side-by-side comparison of net and gross performance for the models reflected in this document is available on the Freedom Advisors platform. Past performance is not indicative of future results. Freedom Advisors does not provide tax or legal advice.