Roosevelt Investments is now CI Roosevelt Private Wealth

Seeking Advice on Income

Published on Sep. 27, 2018

Seeking Advice on Income

In the News:

According to a recent Nuveen survey, households have a more positive outlook on the economy and personal finances than they did three years ago. Despite this apparent confidence, the survey and, both point out that while 80% of survey respondents say they pay particular attention to investment risk, in reality we believe many pay less attention to attendant risks such as interest rate, credit risk and inflation. Of those surveyed, only 32% were able to identify the inflation rate, with 60% not knowing the current rate or thinking that it is higher than 5%. Regarding Interest rates, 40% believe bond values increase when the Fed increases interest rates while 30% believe bond values decrease and another 30% believe the value remains unchanged.

What makes these statistics even more interesting is that 77% of those surveyed say they rely on a Financial Advisor. Households may not fully understand the impacts of interest rates or inflation but according to the survey more that 50% would make an investment change because of rate hikes. The percentage is much higher with millennials as over 80% say they would make and investment change in such a circumstance. This may be great news for advisors who want to reengage with existing clients since 56% of investors indicated that in the next six months they would like to discuss with their financial advisors a portfolio that can generate income while seeking to preserve capital.

The Case for Income Diversification

Adding diverse sources of income to your traditional bond portfolio may help reduce risk, as no single asset class leads in all markets

Chart does not represent the past performance or yields of any Nuveen fund.
Data source: Morningstar Direct, 1 Jan 2008 – 31 Dec 2017. Past performance does not guarantee future results. Performance of all cited indexes is calculated on a total return basis and includes income reinvestment but does not reflect taxes. Diversification does not assure a profit or protect against loss.
Representative indexes: broad bond market: Bloomberg Barclays U.S. Aggregate Bond Index; high yield corporates: Bloomberg Barclays Corporate High Yield 2% Issuer Capped Index; high yield municipals:Bloomberg Barclays High Yield Municipal Bond Index; investment grade corporates: Bloomberg Barclays U.S. Corporate Index; investment grade municipals: Bloomberg Barclays Municipal Index; preferred securities: ICE BofA Merrill Lynch Preferred Stock Fixed Rate Index; real assets: Real Asset Income Blend; senior loans: Credit Suisse Leveraged Loan Index; U.S. Treasuries: Bloomberg Barclays U.S. Treasuries Index; emerging markets debt: JPMorgan Emerging Markets Bond Index (EMBI) Global; U.S. equities: S&P 500® Index. Different benchmarks, economic periods, methodologies and market conditions will produce different results. It is not possible to invest directly in an index.

What are we thinking?

We feel we have a unique perspective when it comes to fixed income and the generation of income. At Roosevelt, we believe in not taking excessive risks to generate income today that may jeopardize the ability of the portfolio to provide income in the future. To produce high levels of income, many portfolios assume a variety of different types of risks. We take a different approach. The Current Income Portfolio (CIP) seeks to benefit investors who desire high and reliable levels of income from an investment grade portfolio. CIP seeks to provide a substantial income stream by maximizing annual cash flows while preserving capital.

To get started feel free to learn more by clicking on any of our links or give us a call, we are here to help.

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