Completing Your Portfolio


Underneath the broad asset classes of stocks, bonds and cash equivalents (e.g., money markets) are a variety of options for building a diversified portfolio. Learn about some of the most common investment choices and how they can help you fine-tune your mix.

Strategy Mix

The right mix for you should provide the right amount of growth and stability for your situation, considering your age, tolerance for risk and future goals.

Stocks
Large-Cap Growth, Core & Value • Mid-Cap Growth & Value • Small-Cap Growth & Value • Non-U.S. Developed Growth & Value • Non-U.S. Small/Mid Emerging Markets

Bonds
High-Quality • High-Yield • Inflation-Adjusted • Non-U.S. Developed • Global • Emerging Markets

Cash EQUIVALENTS
Money Market

Alts
Alternative Income • Market Neutral Strategies

Allocations are hypothetical and are not reflective of an actual investment product. 


Stock Funds

Add Growth Potential to Your Portfolio

Investing in the growth of multiple companies and the economy in general gives you higher return potential than bonds and cash equivalents, but also a greater risk of losses. Here are some terms to know:

Market capitalization (or “market cap”) is the size of company a fund targets.

  • Large-Cap – More established and stable businesses
  • Mid- and Small-Caps – Typically younger, smaller and faster growing firms

Style refers to the type of stocks a fund focuses on.

  • Value – Stocks trading at a discount in relation to their anticipated value
  • Growth – Stocks expected to have high future earnings growth
  • Core – Both value and growth stocks

Sector funds concentrate investments in one specific segment of the economy, like technology and utilities.

Global funds invest in developed countries all over the world, including the United States.

International (or “non-U.S.”) funds do not include U.S. stocks.

Emerging Markets funds invest in countries with developing economies, which tend to be more volatile.

Bond Funds

Look for Income and/or Stability

Higher-quality bonds tend to do well when stocks decline, which may help lower volatility in your portfolio. Bonds also may give you an income stream. Generally, the higher the yield potential, the lower the credit quality—meaning there’s a greater risk the issuer could default on payments.

  • Treasuries – Issued by the federal government and have a high credit quality
  • Corporates – Issued by public and private businesses with varied credit quality
  • Inflation-Adjusted – Issued by the government and corporations and offer returns adjusted for inflation
  • Municipals – Issued typically by state and city governments; in some cases, income from interest payments is exempt from federal, state and/or local income taxes.

Money Market Funds

Find Access to Cash Equivalents and Help Preserve Capital

These investments typically hold bonds that mature in less than one year, such as U.S. Treasury bills.

Although the return potential may be comparatively lower, money markets have the potential to provide greater stability as you get closer to withdrawing money from your portfolio.

Alternatives and ETFs

Consider Options Outside Traditional Stocks and Bonds

 

Alternative Mutual Funds May Help Manage Market Swings

These mutual funds invest in nontraditional assets, such as precious metals, commodities and infrastructure. They do not perform the same way as stocks, bonds and cash. Consider their particular risks before adding to your portfolio.

ETFs (Exchange-Traded Funds) Offer Another Way to Invest

Similar to mutual funds, but different. Like mutual funds, ETFs hold baskets of individual stocks, bonds or other investments, depending on their focus. One key difference is that they trade like individual stocks and so can experience price changes as they are bought and sold throughout the day.


The Bottom Line

Plan for the future with more confidence by understanding what’s in your portfolio. You can then strike the right balance between the potential for losing money with the potential for earning returns as you work toward your retirement goal.


Due to the limited focus of these funds, they may experience greater volatility than funds with a broader investment strategy. They are not intended to serve as a complete investment program by themselves.

Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline.

Diversification does not assure a profit nor does it protect against loss of principal.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

Historically, small- and/or mid-cap stocks have been more volatile than the stock of larger, more-established companies. Smaller companies may have limited resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than the securities of larger companies.

International investing involves special risks, such as political instability and currency fluctuations.

Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.

Alternative mutual funds that hold a variety of non-traditional investments also often employ more complex trading strategies than traditional mutual funds. Each of these different alternative asset classes and investment strategies have unique risks making them more suitable for investors with an above average tolerance for risk.

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