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How have balanced portfolio’s performed year-to-date? For example, clients are looking at the S&P and seeing returns greater than 20 percent, but since some have 40-50 percent in fixed income they are only seeing portfolio returns of about half that.


I think the better way to ask that question is to ask: how have balanced portfolios performed within the context of their financial plans? Given strong equity returns, and not great bond returns, balanced portfolios are doing quite well relative to what an investor who holds a balanced portfolio is attempting to accomplish. That is to take a disciplined, multi-asset approach to portfolio construction in order to tame volatility and provide returns consistent with reaching the goal of their plan over the long term.


Fixed income has certainly struggled this year with rising interest rates.  Additionally, equities outside of the S&P 500 (which is limited to the largest 500 companies in the U.S.) have also struggled.  So, some investors are experiencing gains that are even less than those described in the question.  Emerging markets remain negative year-to-date, with international equities, commodities, and REIT’s also far behind the S&P 500.  Investors with a well-diversified portfolio may also feel humbled by the S&P 500.  However, over the long term, a well-diversified approach that can lower overall portfolio risk has proven superior returns.