Balanced Income Strategy
ThomasPartners® Balanced Income Strategy.
The ThomasPartners Balanced Income Strategy combines the firm's dividend growth strategy with fixed income investments. The strategy has a baseline allocation of 60% equities and 40% fixed income, which can be adjusted by the ThomasPartners Investment Team to help meet its three objectives.
The first objective: monthly income.
Wherever you are in life, it’s likely that one of your primary financial goals is to generate income—income that can help you live comfortably today or income that you can invest now and draw from when you retire. ThomasPartners Balanced Income seeks to provide monthly income by investing in companies with predictable dividends and interest-paying fixed income investments.
The second objective: income growth.
To assist in offsetting the impact of inflation, the ThomasPartners Balanced Income portfolio strategically invests within and allocates across dividend-growth companies and fixed income investments in an effort to grow the portfolio’s income over time.
How are dividend-growing companies and fixed income investments chosen?
Each company is carefully analyzed. Its dividend-growing track record—and its ability to sustain that growth in the future—is considered, questioned, and evaluated. And, once selected, the company is continuously reevaluated. If a company fails to meet ThomasPartners’ high standards, it’s eliminated.
The firm's fixed income philosophy is risk-averse, with fundamentally driven positions chosen based on credit spreads and duration.
The third objective: competitive total returns over time.
Pursue the retirement you want with an investment strategy that’s built to prepare you for the years ahead. In addition to regular income and income growth, the ThomasPartners Balanced Income Strategy seeks to deliver competitive total returns over time through income generation and price appreciation. If you’re at a stage of life where you don’t need to withdraw your income, you can enjoy the power of compounding, since accumulated income can be reinvested in the ThomasPartners Balanced Income Strategy over time.
Estimated Income Growth Since Inception
Based on a hypothetical $1 million initial investment on 5/31/2003. Income growth during certain periods may have been flat or negative. The Balanced Income Strategy is not representative of any single client account and currently uses exchange-traded funds (ETFs) for fixed income exposure, rather than the individual bonds and ETFs that are reflected in this performance chart. Please see below for further information.
Growth of a Hypothetical $1 Million Investment
Growth of a hypothetical $1 million investment assumes that the client was invested in the ThomasPartners Balanced Income Strategy beginning 5/31/2003. The Balanced Income Strategy is not representative of any single client account and currently uses exchange-traded funds for fixed income exposure, rather than the individual bonds and ETFs that are reflected in this performance chart. Please see below for further information.
Investment minimum and fees.
The minimum investment is $100,000.
|Amount of investment||Balanced Income Strategy fee|
|Amounts up to $500,000||0.80%|
|Next $500,000 (over $500,000 up to $1 million)||0.70%|
|Next $1 million (over $1 million up to $2 million)||0.60%|
|Next $3 million (over $2 million up to $5 million)||0.50%|
|Over $5 million||0.40%|
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Past performance does not guarantee future results; the value of investments and the income derived from them can go down as well as up. Future returns and the achievement of stated goals are not guaranteed, and a loss of principal may occur.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Investments in managed accounts should be considered in view of a larger, more diversified investment portfolio.
There are risks associated with any investment approach, and the ThomasPartners strategies have their own set of risks. First, there are the risks associated with investing in dividend-paying stocks, including but not limited to the risk that stocks in the strategy may reduce or stop paying dividends, affecting the strategy’s ability to generate income. Second, investor sentiment could cause dividend-paying equities to fall out of favor and decrease in price. Third, there are risks associated with investing in fixed income asset classes, including through the use of exchange-traded funds (ETFs) that include but are not limited to interest rate risk, credit risk, high yield risk, and government security risk. Please discuss these and other potential risks with your Financial Consultant prior to investing.
Dividend Growing Stocks Chart:
ThomasPartners research with data from the Center for Research in Security Prices (CRSP®) 1962 U.S. Stock Database. ©2015 CRSP, University of Chicago Booth School of Business. The Dividend Growing Stocks chart includes all publicly traded U.S. companies with market capitalization of at least $1 billion (in today’s dollars), adjusted historically for inflation. Beginning in 1976, membership in each dividend classification is set as of January 1 for each year, and then held constant for the next 12-month period (each, a “period”). Dividend Growers and Initiators include stocks that initiated or increased their dividend over the period. No-Change stocks are those that maintained their existing dividend at some point over the period. Dividend Non-Payers are companies that did not pay a dividend at any time over the period. The average return is the compound-analyzed equally weighted average return for each period in the 1976–2015 time frame.
Estimated Income Growth Since Inception Charts:
The ThomasPartners Balanced Income Strategy Composite as shown does not represent any one account. Beginning in August 2016, the fixed income allocation for the Balanced Income Strategy for accounts opened through the Schwab Connection platform will be invested in ETFs to gain exposure to fixed income, rather than the historical use of individual bonds and ETFs for the strategy. As such, a client’s actual performance will vary from the reported Composite performance because of this change in investment vehicles. The ThomasPartners Dividend Growth Strategy Composite is shown for illustrative purposes and is not available for direct investment. It does not represent the performance of any actual account. Estimated Annual Income is hypothetical. Hypothetical performance results have inherent limitations. No representation is made that a client will achieve results similar to those shown. Actual accounts managed by ThomasPartners may have had performance that differs from the performance shown in the chart during comparable periods due to the customization of advice to each client and other factors.
The Estimated Income Growth Since Inception charts assume that a client invested $1 million in the strategy on its inception date (Dividend Growth—3/31/2003, Balanced Income—5/31/2003). Each period’s estimated annual income shown is the product of that initial $1 million investment and the accumulation of capital appreciation plus reinvestment of all distributions of income since the inception date, multiplied by the annualized strategy yield. The strategy’s annualized yield at each listed measurement date is derived by annualizing the last dividend paid for each stock in the portfolio, and dividing that dollar amount by the price of the stock. The dividend yield for the S&P 500® Index and the NASDAQ U.S. Broad Dividend Achievers Total Return Index (DAATR) is obtained from Bloomberg for 2014 and 2015. The dividend yield is calculated using the gross dividend receipts over the prior year divided by the ending index value. This calculation is different than in prior years. The dividend yield for the DAATR was previously calculated by ThomasPartners based on the methodology recommended by the index provider. Please note that the strategy’s yield-calculation methodology may result in a higher yield than the index yield methodology because generally the dividend paying equities in the strategy will increase their dividends over the course of a 12-month period, resulting in an annualized methodology based on the last dividend paid for each stock being higher than a methodology using the actual dividends paid over the trailing 12 months.
Returns are expressed in U.S. dollars, presented net of fees and expenses, and include the reinvestment of all income. Prior to the addition of wrap accounts beginning 6/30/2005 for Dividend Growth, and 6/30/2008 for Balanced Income, net-of-fee performance was calculated using actual management fees. After wrap accounts were added, net-of-fee performance is calculated net of actual management fees, non-bundled fee accounts, and actual bundled fees paid for bundled fee accounts. Bundled fees, which include wrap fees and all-in fees, generally include management fees, trading costs, custodian fees, and other administrative expenses. Actual net of management fees on non-wrap accounts is presented as it represents a higher fee than offered by this specific wrap sponsor.
The Blended Benchmark for the Balanced Income strategy is composed of 62.5% DAATR and 37.5% Barclays U.S. Intermediate Government/Credit Bond Index. The S&P 500 TR/ Bar. US Intermediate is composed of 62.5% S&P 500 TR Index and 37.5% Barclays U.S. Intermediate Government/Credit Bond Index. The yield for the Barclays U.S. Intermediate Government/Credit Bond Index is based on the 30-day SEC yield and is provided by Morningstar Direct. Indexes are unmanaged, do not incur fees or expenses, and cannot be invested in directly.
Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
This information is for general purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
Portfolio management is provided by ThomasPartners, Inc. (“ThomasPartners”), a registered investment advisor. ThomasPartners and Charles Schwab & Co., Inc. (“Schwab”) are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. ThomasPartners strategies are available through the Schwab Managed Account Connection® (“Connection”) program. Please read Schwab’s disclosure brochure for important information and disclosures relating to Connection and Schwab Managed Account Services.