Some consider bonds less exciting than stocks or exchange-traded funds. But they’re important.
A bond is essentially a loan to a government or corporate entity which pays interest over time and returns capital at maturity. Forté uses bonds to produce cash income and to provide investment diversification. When combined with stocks in a client’s portfolio, bonds can reduce risk.
However, not all bonds are created equal.
Forté clients expect us to select bonds issued by entities that have the financial wherewithal to pay as promised. Our role, as advisor, is to assess and balance three key factors: the risk factors present in any issuer, the overall credit quality of the bond issuer and the yield to be received.
Timing and diversification matters with bonds too.
Forté general builds “laddered” portfolios that have bonds maturing at various points in time, so our clients have predictable cash flows and income. And because protecting principal is important, we not only ladder maturities but also diversify bond holdings by economic sector, business and geography.