WHY I ANCHORED OUR INVESTMENT PORTFOLIO WITH JUST ONE GLOBAL BOND FUND!

When I began this blog, in February of 2012, I had expected it to focus mostly on financial topics, following my 39 year career in the securities markets.  For a secondary theme; however, some of life’s journeys—describing my retirement, the need for young new parents to have a will and life insurance so they could choose suitable custodians for the infant, in the event they cannot, etc.—should also be included.

I have personally encountered some health issues recently, which is why I have only written a few posts over the past several months; but, this one is really one for my family who might ask “Why not an American bond fund?” Michael Haasenstab, of Franklin Templeton, is a Fixed Income Manager whom I had been placing clients with his several mutual funds, when I was working, for two different reasons.

Now, why am I describing the great qualities of who I believe is the absolute BEST?  Eight months before I retired, I invested 25% of our total portfolio in the Templeton Global Reserve Fund, one of several he manages.  During that six years, however, it now represents 23%.  That’s not bad in the current low interest rate environment, specially when stocks are charging ahead!

Dr. Haasenstan can trade any bonds, and had even owned U. S. Tax-free municipals when that market had been nearly frozen shut-in 2008.  That lack of restrictions allows him to invest in any country, and in any type of bond that he chooses.  Currently, he believes that U. S. Bond rates will rise, which would cause market values to drop proportionately.  I certainly agree, especial with the Republican Pray in charge of both Congress and the White House.  Bond prices and yields, incidentally, usually move in opposite directions.

Lately, he wishes to buy an attractive bond, but he doesn’t like the underlying currency, such as the Euro, Haasenstab can buy the bond, but “short” the currency. (Shorting a currency simply means borrowing something you doubt the value (or merit) of, and which you intend to sell later, when you wish.)

I am an aggressive investor, had remained fully invested during The Great Recession, and we came out in quite good shape.  In a recent post, I described how I came to realize that most securities firms were too focused on keeping client portfolios quite close to the current industrial breakdown of the Standard and Poor’s. In essence, maintaining the status quo.

So, I broke away, focusing more on Technology, and increasing the weighting in Health Care slightly.  Since early in the year, this strategy has worked really, really well.  Obviously, no one knows what the future holds. Those two related posts are linked, as follows: Part One and Part Two.

As I mentioned at the beginning, this post is mostly intended to explain to my family why I have used just one bond fund—a global one—to anchor our joint portfolio. Initially, it accounted for 25% of the portfolio and, frankly, I never worried about it’s performance, as long as I didn’t invest it in stocks. During that six years, however, it now represents 23%. That’s not bad in the current low interest rate environment, specially when stocks are charging ahead!

I do have a couple more posts in mind; however, I am currently preparing an investment plan—a few Tech stocks, ETFs and the one bond fund for when my wife and daughter will have when they have to take over the management of our investment portfolio.  Obviously, I surely will never know if they did, in fact, follow the plan or, perhaps, contact the financial advisor that my brother uses.  As I wrote earlier, this is just another one of life’s adventures.

NOTE:  Two topics that I hope to write posts about when, and if, possible are:

!. How many financial advisors are automating themselves out of their current jobs.
2. The horrible MISTAKE that was Vietnam actually began over a millennia ago.

Advertisements

,

  1. Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: