Weekly Market Recap This week saw positive data on US consumer spending. However, US employment improved less than expected. US manufacturing activity appeared a little weaker, but still grew. In the Eurozone, low inflation prompted the prospect of further monetary stimulus for the region. We also saw the end of the third quarter of the year, which marked the worst quarter for global financial markets since 2011, as concerns over Chinese growth and global commodity pricing weighed on markets. While many investors have not been pleased with the direction markets have headed in recent months, you should always keep in mind that such pullbacks and volatility are actually quite a common component of financial markets and a normal part of investing. Furthermore, recent weeks have seen lower volatility.
This week we want to discuss the bonds (aka fixed income) that you may have in your portfolio. Fixed income, just like equities, is a diverse asset class. Factors such as how long until a bond is expected to be repaid, and the credit quality of the entity issuing the bond can cause different bonds to respond in diverse ways to market events. For example, a short-term government bond can be a very stable investment in most scenarios. On the other hand, high yield bonds can, at times, appear to trade more like a stock than a traditional bond. It is also worth noting that, contrary to popular belief, bonds have generally offered positive returns during periods of tightening monetary policy according to the recent book Invest With The Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy, by Robert R. Johnson.
At FutureAdvisor we typically implement or recommend portfolios that include fixed income investments that are generally high credit quality, internationally diversified, and of moderate duration. These properties mean that the fixed income element of our portfolio helps to offer stability during times of equity market weakness, which is one of the many reasons why we believe bonds can help smooth portfolio returns over time. As you would expect, we generally use fixed income ETFs that can contain thousands of different bonds. We also diversify fixed income instruments by including foreign bonds. At a time when the US may be close to raising rates, many countries internationally are moving in the other direction. Finally, we also include or recommend Treasury Inflation Protected Securities (TIPS) as part of fixed income exposure, like the real estate component of your portfolio, we expect to help offer stability - especially when inflation rises.
Disclaimer:
The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. Clients may lose money. Past performance is not indicative of future results. Investments in securities involve the risk of loss. Any tax strategies discussed should not be interpreted as tax advice and do not represent in any manner that the tax consequences Your Portfolio Update Over the past month your portfolio was up 1.0%, and we have no recommendations at this time to improve it. Congratulations on maintaining one of the best portfolios among all our clients. We will, as always, continue monitoring your account and alerting you if there are actions to take (periodic rebalancing is required, etc). Ways To Improve Your Portfolio | 0 Accounts with Actions | Your portfolio has no recommended actions right now. We'll watch over your investments and alert you with an email when there are actions for you to complete. Sign in to see detailed steps  | | Sign in to see your full dashboard | | 
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