Portfolio Solutions Announces Shift in Core Investment Portfolios

Firm Employs an Index Investment Management Approach and Will Move to a 65% U.S. and 35% International Weighting for Stocks

TROY, Mich.--()--Portfolio Solutions®, a provider of integrated wealth planning and investment management services for more than 600 clients located across nearly 50 states,1 announced today a shift in its core investment portfolios by placing greater weight on international stock and bond investments.

“We believe this weighting will offer investors the best mix of return and risk reduction over the long-term”

The firm, which employs an index investment management approach, is moving to a 65% U.S. and 35% international weighting for stocks as conditions overseas have created improved opportunities for asset growth outside of the United States.

“After much consideration, we believe it is time to make this change to reflect the continued evolution of markets abroad,” said Tony Watson, Chief Investment Officer at Portfolio Solutions®. “We believe this weighting will offer investors the best mix of return and risk reduction over the long-term,” he said.

Scott Donaldson, CFA, CFP®, a senior investment strategist in Vanguard Investment Strategy Group, notes in the article entitled, “When the world beckons” on the Vanguard Blog for Advisors that “diversifying between U.S. and international equities and between U.S. and international hedged fixed income gives you the chance to participate in whatever region or asset class is outperforming at the time. Because U.S. and international markets may perform differently—at times, very differently—a global portfolio may provide smoother performance over the long term than a portfolio invested wholly in one region or the other.”2

The decision, which was made by Portfolio Solutions® Investment Committee, reflects the view that conditions in international markets have become favorable for investment over the long-term. The Committee plays a critical role in fulfilling the firm’s fiduciary duty to clients and in executing upon its investment philosophies and is composed of six members of Portfolio Solutions® senior management team.

“The shift to a greater focus on foreign stocks is the culmination of years of market analysis and trend observation in international markets,” Watson said.

Portfolio Solutions®, which has historically not had an allocation to international bonds due to barriers such as cost and illiquidity, recently established an international investment grade bond allocation using the Vanguard Total International Bond Index Fund (VTABX). The firm has taken a 20% tilt to international bonds via a 65%/35% U.S./international split for investment grade bond exposure. This change is not applicable for clients holding municipal bonds or using a bond ladder.

“Today, we have reached a point where investors can access these foreign markets through broadly diversified, low-cost bond funds,” said Watson.

“Though international bonds are subject to currency fluctuations, hedging can help reduce volatility and create more beneficial risk-adjusted returns in the portfolio,” he said.

Foreign stocks and bonds, which are less correlated with domestic stocks and bonds, can provide unique advantages such as exposure to a broader set of macroeconomic and market forces and hedge against a potential downturn in U.S. markets.

James S. Gladney, Chairman & CEO of Portfolio Solutions added, “In many more international markets, assets can be accessed more cost effectively and efficiently, political and legal systems have improved, and investors are more globally aware and desire to own foreign assets.”

About Portfolio Solutions®

Portfolio Solutions® has been offering investors financial solutions since 1999. We provide integrated wealth planning and investment management services so that our clients can work confidently toward their long-term financial goals. We have a long-standing and enduring commitment to index investing strategies, with more than $1.56 billion in client investment assets under management.1 For more information, visit https://portfoliosolutions.com/ and follow us on LinkedIn and Twitter.

1 As of January 31, 2018
2 Donaldson, Scott, “When the world beckons”, October 13, 2016, “Vanguard” Blog for Advisors, https://vanguardadvisorsblog.com/2016/10/13/when-the-world-beckons/

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Nicole Milici
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nmilici@portfoliosolutions.com

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Release Summary

Portfolio Solutions announced a shift in its core investment portfolios by placing greater weight on international stock and bond investments.

Portfolio Solutions