Defined Income Portfolio
Fund Spending Needs Precisely, Predictably and Flexibly
The Asset Dedication Strategy splits the portfolio into two parts: the “Income Portfolio” and the “Growth Portfolio.” The Income Portfolio is engineered to provide a defined stream of secure cash flows to fund any pattern of spending needs. The cash flows from coupon interest and redemptions of safe, investment grade bonds held to maturity. These bonds are purchased in the just the right quantities redeeming at the right time over a time horizon chosen by each client to integrate with the financial plan. For those not in retirement, the Income Portfolio finds advantageous spots along the yield curve.
The chart above shows how we may have implemented a defined income portfolio in an attempt to match investments to a client’s future spending needs.
Potential Benefits of the Defined Income Portfolio
Cash Flow Matching
Rising Interest Rate Management
Implementing the Income Portfolio
Watch Professor Huxley and Brent Burns meet with the American College to dig into the research behind the defined income portfolio. Enjoy!