When Bonds Are Essential

In a low interest rate environment like the present, especially after stocks have produced such exceptional returns, it can be easy to ignore bonds as a component of one’s investment strategy. As a result, today’s investors may be reluctant to allocate a portion of their assets to bonds.

There are aspects of overall strategy and risk control, however, that make bonds an essential part of a sound diversified strategy. They’re one of the few investments where investors are reasonably assured of the return of their capital in a controlled manner. So, if risk control is important, bonds need to be considered.

ICM uses various techniques to manage portfolios in the Core Taxable Bonds strategy. Depending on its evaluation of the risk and potential for return implicit in its interest rate expectations, the team uses different combinations of individual bonds and bond derivative products to position the portfolios for optimum results. In today’s investment environment where interest rates seem likely to rise, the current emphasis is on preserving capital.

Portfolio Characteristics Core Taxable Bonds
Number of Issues Approximately 20+ Per Portfolio
Duration Range Varies with Interest Rate Expectations
Issue Maturity Range 0-30 Years
Minimum Account Size $250,000
Current Yield Approximately 5.0%
Recommended Benchmarks Barclays Capital Aggregate
Bond Index