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Asset Class Adjustments

Asset Class Adjustments

By increasing your exposure to certain asset classes, you can increase the income from your portfolio. In the example below we reduce growth stocks for more value stocks and real estate, precious metals in favor of more hybrids (preferred stock and convertible bonds), and lower yielding bonds in favor of higher yielding ones.

  Base 60 Enhanced Income 60
Stocks: 60%    
US Large Growth 5.5% 2%
US Large Blend 11% 11%
US Large Value 11% 15%
US Small Blend 6% 3%
US Small Value 6% 8%
Real Assets 8% 10%
International Core Equity 9.5% 9.5%
Emerging Markets 3% 1.5%
Alternatives: 5%    
Hybrids 3% 5%
Precious Metals 2% 0%
Bonds: 35%    
US Investment Grade 24% 26%
High Yield 2% 5%
Inflation Protection 4% 1%
Global 4% 2%
Cash/CDs 1% 1%

The allocation is still diversified and well-balanced, but it has more of an income focus to it. The adjustments can be made portfolio-wide, as in the example above, or simply within a few asset classes.