For most clients investing in taxable accounts, sticking to high-quality short and intermediate bonds
should, for a large portion of their fixed income portfolio, mitigate the effects of these occasional liquidity crises.
The Loomis portfolio is invested in intermediate bonds
, which Riddix says could help absorb any bumps if interest rates rise, The Loomis fund's current 4.59% yield is something of a portfolio boost at a time when savings accounts and CDs pay investors less than half that amount in interest.
By comparison, the S&P 500 grows by about 11% over the long term, while fixed products and intermediate bonds
grow by 5% to 7% over the long term.
growth and value stocks, stocks of developed and developing foreign markets, intermediate bonds
, and real estate investment trusts (REIT)], using all benchmark data.
Asset mix guidelines identify asset classes - such as large cap stocks, mid cap stocks, small cap stocks, international stocks, intermediate bonds
, international bonds, and high yield bonds - approved for investments with the maximum and minimum range for each asset category.
For intermediate bonds
, the standard deviation of returns was lowest in the 1960s (0.7 percent), higher in the 1970s and 1990s (at 1.2 percent in both cases), and highest in the 1980s (2.0 percent).
are an investor's friend: They produce a hefty portion of the returns of long bonds with much less principal risk.
12 on the BE ASSET MANAGERS list with $428 million in assets under management), says investors should stick with intermediate bonds
, which have a maturity of three to seven years, for the moment.
* Intermediate bonds
. Lehman Brothers Aggregate Bond Index.
You would think that with interest rates being so low, you'd want to invest in longer dated bonds because they'd pay more.
"Being 100% invested in any kind of asset class is probably taking on too much risk." He suggests that Thomas place some of his money into mutual funds that have intermediate bonds
or corporate bonds for a mix that is 70% to 80% stocks and 20% to 30% bonds and cash.
"My feeling is that the best values are in intermediate bonds
, at least in the Treasury market."