Most investors use stocks, bonds or cash to try to reach their goals.
They own stocks if they hope to retire comfortably and have something to leave for their kids or grandkids. Stocks can be volatile, however, and they’ve experienced some steep declines.
Cash can offer stability, but it doesn’t have the growth potential most people need.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling 866-455-3863 or clicking here. The chart illustrates the performance of a hypothetical investment and assumes reinvestment of dividends and capital gains. See index definitions below.
How bonds can help you move forward
Some investors have extra cash in their accounts right now. They’d like it invested—and they probably need to invest it to reach their goals—but they’re worried they might be buying into the stock market just before a decline. Bonds could be a way for these investors to step back into the market.
Bonds have outpaced cash over time, so they can help investors try to grow their assets while waiting for the opportunity to buy into stocks. Bonds have been less volatile than stocks, and they’ve held up better in down markets, and that can help investors stay invested, even during market declines.
Which bonds to own now?
There are risks in the bond market, of course, such as rising interest rates (read more on possible bond market changes here), so it makes sense to invest in a fixed income strategy that can adapt to these changes. Many investors use index funds to get low-cost exposure to the bond market, but index funds may not be well positioned for higher interest rates. The Bloomberg Barclays Aggregate Bond index is a common proxy for the overall bond market, and it includes mostly government bonds, which tend to be more susceptible to interest rate changes.
Our Flexible Income Fund (INCMX) uses a fixed income approach that’s designed to adapt to changing bond markets. INCMX has done particularly well as interest rates rose over the last few years by targeting the areas of the bond market that held up best when rates rose, like floating-rate, high-yield and strategic bond funds.
In more challenging bond markets, like the 2008 credit crisis, INCMX owned more defensive bond funds, like shorter-term bonds and Treasuries. By actively responding to changing bond markets, INCMX outpaced the bond market over the last 15 years without much difference in volatility, as you can see on the chart.
If you’ve got too much cash and you need to get more fully invested then consider a fund like INCMX. You’ll have a strategy that seeks to help you navigate changing interest rates and stay on track in an ever-changing world.
Invest in INCMX
If you’re looking for a fixed-income approach that is designed to adapt to changing bond markets, consider INCMX. The fund is available at most major brokers for as little as $1,000, or you can invest directly. INCMX is intended for investors with at least a two-year time horizon.
Call 1-866-455-3863 to get started or click here to open an account online.
Index definitions: The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. The Barclay's Aggregate Bond Index is a market-capitalization-weighted index of investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year. You cannot invest directly in an index. The JP Morgan Cash 6 Month index measures the total return performance of six-month U.S. dollar deposits.
Disclosure: Stocks, bonds, and other asset classes have different risk profiles, which should be considered when investing. All investments contain risk and may lose value.
Publication Date: Upgrader Quarterly: Winter 2018