A Fidelity Income Portfolio

09/25/2002 12:00 am EST


Jim Lowell

Senior Partner & Chief Investment Strategist, Adviser Investments

If you invest through Fidelity mutual funds, Jim Lowell’s Fidelity Investor is a must read.  The service analyzes the entire world of Fidelity funds, assessing the past and expected future performance of individual funds and developing various portfolios. Here’s Lowell’s advice for income investors.

“Our Fidelity Income Portfolio is designed for retirees who are seeking a steady, reliable source of income, or for investors seeking a counterbalance to a portfolio which is overly growth-oriented. The objective of this portfolio is plain (but hardly simple): to generate a monthly income stream which provides a minimum 3% yield advantage over and above the current rate of inflation, with a long-term return which is also 3% greater than the current rate of inflation, without dipping into your capital.“

“Given the likelihood that we’ll be entering a rate hike environment for the next several years, fixed-income investors will need not simply more advice, but better advice and options. Our recommended Fidelity Fund holdings for this portfolio are:

Fidelity Real Estate – 10%

Fidelity High Income – 20%

Fidelity Inflation-Protected Bond – 40%

Fidelity Strategic Income – 20%

Fidelity Cash Reserves – 10%

“The goal of this portfolio is to deliver a livable yield with low volatility, which makes the overall portfolio livable, too. So while it’s true that a fund like High Income is high-yielding because it’s a junk bond fund, it’s also true that manager Frederick Hoff runs a diversified portfolio, which offers a measurable defense against owning a laddered group of junk bond funds in your own right. Strategic Income, ventures around the world and back, whereas Inflation-Protected Bond stays close to home. Real Estate, while obviously not a bond, is an excellent long-term investment in real estate investment trusts, for both yield and total return reasons. Combined, this portfolio is designed to let you live as you are for all your years to come.”

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