Pavlic Investment Advisors Inc. strives to strike a balanced portfolio that invests the right percentage of your wealth in stocks, bonds, and REITs. Our bond portfolio strives to maximize bond coupon interest income while substantially minimizing the risk of bond default. We hold bonds until they are either mature or are called to reduce unnecessary trading costs associated with owning direct bonds.
Our bond portfolios are comprised of eight to 10 investment-grade corporate bonds with the goal of preserving principal while generating income above the rate of return an investor can earn by holding cash in a savings account. We protect your investment by only investing in the highest quality investment grade corporate bonds with a minimum rating of “BBB” and similarly equivalent rated municipal bonds. If a bond drops below investment grade, we sell so as to never risk default.
We ladder our maturity years to generate income while maintaining price stability. This means we invest an equal portion of your portfolio in bonds that mature each year over a future 10-year horizon. As bonds mature or are called, we look to rebalance either back into bonds or our equity portfolio if stocks present a better risk/return profile. Our goal remains to maximize coupon interest, remove a layer of fees through bond mutual fund expense ratios, and add price stability by holding bonds until maturity.
Our wealth managers continuously monitor bond markets, looking for opportunities to swap out lower yield bonds with better yielding bonds. But if those opportunities do not present themselves, we hold on to bonds until they mature before purchasing new bonds. Similar to stocks, we discuss what is working and what isn’t working in the bond market, and we are realistic about return expectations if bonds are held through maturity.
We would love to start a conversation with you to see how we can help.