*The Balanced Composite represents two unmanaged benchmarks, weighted 60% Dow Jones Wilshire 5000 Index and 40% Lehman U.S. Aggregate Bond Index through May 31, 2005; 60% MSCI Broad Market Index and 40% Barclays Capital U.S. Aggregate Bond Index thereafter.
This graph is solely represented to demonstrate the risk/reward characteristics of using the balanced approach and does not reflect the actual performance of individual portfolios. Further given the vagaries of the financial markets, past performance should not be used to project future results.
The investment strategy primarily employed for clients by Richard L. Evans Investment Management, LLC is a balanced approach. This approach is attractive in that it offers a lower market volatility risk and opportunity for growth and income. Even with periodic market declines, this strategy has an excellent record of compounding gains for investors.
The value of a Balanced Strategy really stands out over time. While investors today are being lulled into a degree of complacency, with 8 years of a rising market, and taking on ever high risk, it was not that long ago when the market suffered two major declines, 2000-2003 and 2007-2009. That period was a “lost decade” for most investors, and it took several more years for them to just “break even”.
But by the time when most investors were finally breaking even, the conservative balanced approach had produced 40% higher gains. And at the end of 2016, as investors were flocking into the market, into speculative investments for fear of missing out, the risk-managed approach had still produced superior returns. Of course, in any one year, the balanced approach will not work as well as, say, a straight stock approach. And then there is the question of choosing the right balanced funds, as they tend to vary in performance in any given market cycle. And balanced funds do drop in value during market declines.
However, just using a simple 60/40 balanced portfolio composite, versus the S&P 500 total return over the last 20 years, if an investor takes only a 60% market risk, yet attains 80% of the market return, they are going to come out ahead again and again. If investors give up 20% in the S&P 500 during down years, and only 9% with the balanced approach, it is far easier and faster to make up lost ground and to move into positive territory. It is in the math.
It is worth repeating that the Balanced Growth and Income Strategy has stood the test of time many times over. Within the framework of the balanced investment strategy, RLEIM will customize the program to the needs and requirements of individual investors. Different investors with varying degrees of risk factors and age may vary from emphasis on more growth to more income.
And also worth repeating, as it is so important in the financial services industry, Richard L. Evans Investment Management, LLC is registered under the Investment Advisers Act of 1940: client interests are first and foremost and conflict-free advice is tailored to each client’s needs and goals.