Yahoo Finance How You Can Diversify Your Portfolio
Bonding with Diversification: How You Can Diversify Your Portfolio (Part 8 of 8)
More flexible approaches to fixed income investing can make more sense, offering higher yield potential and meaningful diversification while at the same time seeking to reduce overall volatility. For example, because the BlackRock Total Return Fund has a low correlation to the S&P 500, equity risk in a fixed income portfolio has the potential to be reduced through the use of the fund. The BlackRock Strategic Income Opportunities Fund, meanwhile, can be an appropriate choice for those investors who may be concerned about rising interest rates as it can adapt to changing market conditions through blending traditional and non-traditional investment strategies. Finally, if you’re looking to increase yield you may allocate a higher portion of a portfolio to the BlackRock Multi-Asset Income Fund because it targets alternative income sources.
Market Realist – Diversify your portfolio by owning flexible funds.
The BlackRock Total Return Fund is diversified bond fund that invests in corporate bonds (AGG)(LQD) and notes, mortgage-backed securities (VNQ)(IYR), asset-backed securities, convertible securities, preferred securities, and government obligations (TLT).
The graph above shows the annual returns on the fund over the last ten years. The fund has given returns of 4.3% on a CAGR (compound annual growth rate) basis, which is reasonable. The lowest return of -11.5% came in 2008, while the highest returns came in at 15.8% in the next year. Mind you, the latter came at a lower base.
In 2014, the fund gave returns of 7.7% at a time when the hunt for yield had driven yield-hungry investors to very risky pockets.
Read on to the next part of this series to see the risks involved in fixed income investing.
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