Back in October 2019 the head of investment strategy for CI Signature Investments wrote a piece titled “Modern Portfolio Theory, RIP”. In it he argued that with interest rates then at a historically low average of 1.5%, the fixed income portion of the traditional balanced portfolio was set to produce much lower than historical rates of return for clients. Now that interest rates have fallen even lower, and the average yield for these same bonds is roughly 0.5%, we thought it may be worth revisiting this article as well as the thesis behind it. It’s thesis is that investors and advisors alike will need to be looking at alternative investment strategies if they are to receive the kinds of the returns they will want and need for their futures.
As our clients will know we at CH have embraced this philosophy that stocks and bonds are not sufficient to provide a solid portfolio for our clients. Over the years we have used real estate and other alternative strategies geared to achieving both acceptable long-term rate of return and focusing on cash flow generating investments that will help build and maintain our clients’ wealth.
Please take a read, and if you should have any questions let us know.
Brian Trafford, CIO
& Your CH Financial Team