When Should Advisors Focus on Income Funds?

On September 14, 2018

iSectors CEO, Vern Sumnicht, and Chief Investment Officer, Chuck Self discuss the importance of investing in income funds and when it might be a good time for investment advisors to do so.

Show notes (charts mentioned in order during this discussion):

  1. Consumer prices (in red) are growing at a faster rate than can be earned in short-term instruments (in blue.) Sources: BLS, Board of Govenors
  2. High Dividend Stock Total Return minus Growth Stock Total Return.  Source: Fidelity
  3. Concentrated sources of income in most income-focused funds.  Average Percentage Allocation 4/1/2006 to 3/31/2016
    Chart a. Chart b. Sources: Morningstar
  4. Junk Bonds Act More Like Stocks Than Bonds. Correlation matrix of nominal returns from 1976 through 2016.
  5. For the six months ending 8/17/2018, the following sectors would make good holdings in such a portfolio (this is not a recommended portfolio).

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