Bob Carlson, through his leading financial advisory Retirement Watch, provides an independent source of expert information and advice on all the financial aspects of retirement. Here, he reviews a trio of funds that offer global diversification to a retirement portfolio.
We have global stock positions through WCM Focused International Growth (WCMRX). The fund is among the top performers in its category over most periods, according to Morningstar. Its management is very selective. The fund owns only 32 stocks of what it believes are great growth companies.
For a stock to be added to the portfolio, the fund’s analysts must be convinced after rigorous analysis that the company is likely to sustain its growth. Then, WCMRX will hold a stock for years. About 39% of the fund is in the 10 largest positions. Of course, the fund isn’t immune to the global stock decline.
We also own global stocks through the closed-end fund Cohen & Steers Infrastructure (UTF). The fund invests in companies around the globe that are engaged in any kind of infrastructure business, such as pipelines, airports, railroads, utilities, cell towers and more.
The fund develops an outlook for the global economy as well as for different regions and countries. Then it seeks infrastructure investments that are likely to do well in those economic environments. Top industries in the fund recently were midstream pipeline companies, electric utilities, cell towers, railroads and airports.
The fund now is selling at a hefty 9.23% discount to net asset value, compared to its 6.53% average discount for the last six months. The fund uses almost 30% leverage. The recent distribution yield was 9.22%. The fund didn’t make any return of capital distributions the last two years.
In our "Retirement Paycheck" portfolio, we added emerging market bonds through DoubleLine Emerging Markets Income (DBLEX). Emerging markets entered bear markets in early 2018 and appear to be at or near their bottoms.
I like DBLEX because it doesn’t try to follow an index, so it doesn’t own low quality securities or invest in weak economies simply because they’re in an index. It feels free to be heavily tilted toward a region when that seems best for its shareholders.
The fund also focuses on preserving principal instead of putting it at risk by reaching for higher yields. Also, the fund has a good record of managing currency risk. Since its inception in 2010, the fund has owned primarily bonds denominated in U.S. dollars. Shareholders haven’t taken the risk of fluctuating emerging market currencies.
DBLEX invests primarily in corporate bonds, not sovereign bonds. It looks for companies with improving financial positions that aren’t recognized yet by credit rating agencies or the markets. Its largest country positions recently were India, Brazil, Mexico, Chile and Panama.
The yield for the fund is up to 5.43%. The fund has two share classes. To avoid the $100,000 minimum investment of the DBLEX share class, buy the DLENX shares.
