Defined Income Portfolio

Fund Spending Needs Precisely, Predictably and Flexibly

The defined income portfolio is engineered to cost-effectively protect principal and reduce exposure to rising interest rates while precisely matching fixed income securities to spending needs or finding advantageous spots along the yield curve.

Deferred Income Chart - Sample

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.

Disclosures

The chart above is intended for illustrative purposes only. The securities used to create the projected cash flow columns were sourced on 10/19/2014 and are listed in the underlying securities tab. Because the fixed income market is constantly changing, the securities used to create this table should not be interpreted as representative of the current fixed income market. The projected cash flows do not represent a guarantee. Individual fixed income securities have the potential for default. Each security is assumed to be held to maturity. Individual securities reflect yield to maturity. Yield calculations for Inflation-Indexed securities include an assumption for future inflation.
  Deferred Income Table - Sample The table above shows securities that we may have purchased in an attempt to match cash flows to a client’s future spending needs.

Disclosure

The table is being shown for illustrative purposes only. We sourced the securities listed in the table on 10/19/2014. Because the fixed income market is constantly changing, the securities used to create this table should not be interpreted as representative of the current fixed income market. The projected cash flows do not represent a guarantee. Individual fixed income securities have the potential for default. Each security is assumed to be held to maturity. Individual securities reflect yield to maturity. Yield calculations for Inflation-Indexed securities include an assumption for future inflation.

Potential Benefits of the Defined Income Portfolio

Cash Flow Matching

We understand that accounts may have unique cash flow needs and may benefit by holding different fixed-maturity securities. Given this, we engineer the portfolio to match the specific cash flows that your client desires with the fixed-maturity securities that you define.

Flexibility

We build each client’s portfolio with fixed-maturity securities so that they have the flexibility to change their portfolio as their financial plan evolves. This is in contrast to annuities and other income-producing products that have surrender charges and fees that may restrict your clients.

Rising Interest Rate Management

We manage rising interest rates by purchasing fixed-maturity securities, and holding them until they mature. This gives us a secure advantage in long-term planning over bond funds that must sell their performing bonds when interest rates rise, and rely on chance to keep yields attractive.

Principal Protection

We believe it is essential to protect the principal for anyone who will rely on their fixed-income investments for spending needs. To deliver predictability, we hold investment-grade fixed maturity securities to maturity, so that your clients can effectively lock-in their principal investment while generating yield along the way.

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!

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