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|
|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%|
|International Core Equity||9.5%||9.5%|
|US Investment Grade||24%||26%|
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.