How to balance fixed income and equities in your portfolio

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How to balance fixed income and equities in your portfolio

00:00 Speaker A

bonds that are the drag on your portfolio until they’re the thing that saves your portfolio. For our chart of the day, we have a bar chart showing how bonds can protect your portfolio in the event of a recession here. How much bond exposure should you recommend investors have right now?

00:21 Speaker B

Look, I mean, I think everybody’s allocation is different, depending on their overall goals and objective and time horizon. But let’s say, you know, you’re you’re a mixed investor, half in equities, half in fixed income. We’d actually recommend a little bit more fixed income, above and beyond your target. And the reason being is simply return skew. Um, you know, right now, with a 450 tenure, let’s call it, shock interest rates up or down 100 basis points and look at what happens over the next year in terms of total return. Well, if if interest rates go up 100 basis points, you know, you’re down roughly 2 and a half percent, but if they go down 100 basis points, you’re up roughly 12%. And so the risk return skew there does is attractive. And you know, we walked through some of the stretch valuation in the equity space. If that were to reprice, uh, we do think bonds offer some attractive diversification, uh, characteristics for portfolio in that in that case.

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#balance #fixed #income #equities #portfolio

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