Retirement Freedom Strategy

Risk Level: Low
Return Objective: Growth

Strategy Description

This strategy invests in high-yield bonds when returns are higher than alternative interest-rate options. In most situations, high-yield bond funds provide better returns than long-term government bonds, but in times of rising interest rates, the risk associated with high-yield bonds rises. When the Strategis Investment Committee and consultant believe the risk level of high-yield bond funds is high, assets may be moved to other types of high-quality bond funds such as funds that invest in government bonds, or to a money market fund.

Strategis uses a proprietary method for ranking the various areas of the bond yield curve and for switching between high-quality bonds and high-yield bonds.

Investment Objectives

The objective of this strategy is to earn the highest available rate of return at any given time, while attempting to limit downside risk.

Reasons To Consider This Strategy

Financial planners often recommend a significant bond allocation in any portfolio, because bonds frequently are negatively correlated with stocks. As a result, they can reduce the volatility of a portfolio. High grade and government bonds are usually regarded as low risk, because if they are held to maturity the investor gets the principal back as well as the interest at the rate stated on the bond for the full duration of the bond.

Bonds are not always negatively correlated with stocks, however. They can move in the same direction and can even lose a significant portion of their value. If it becomes necessary to sell the bonds before the maturity date, investors are subject to that risk, which can occur at several points during the life of a 30-year bond.

Investors also need to be aware that the annualized returns for bonds are often not as great as for stocks. High-yield bonds are much riskier than high-quality bonds.

During periods of stock market weakness, it is not unusual for money to move from stocks and high-yield instruments into government securities. Frequently the flight-to-quality move is large and being in a longer duration instrument offers a significant advantage with little, if any, additional risk.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance of any specific Strategis strategy will be profitable or reach its performance objective. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be either suitable or profitable for a specific investment portfolio.

Performance:

By clicking the link below you will be taken to a web site maintained by Theta Investment Research, an independent company that tracks investment manager performance. You will be asked to enter an email address then you will be sent an email with instructions on how to access the performance information for this and other Strategis Financial Group investment strategies.

Performance numbers at the Theta Investment Research site come from an actual client account and are net of fees. You will also be able to adjust the time frame of the strategy performance and select alternative benchmarks for comparison.

If you would prefer, you can call and speak to a Strategis representative (800-279-3377) and we will be happy to send you a copy of the performance report by regular mail.

If you are a Strategis client and you want specific information about your individual account, please call and speak to your Strategis representative about how to access account information online.

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