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If You Want to Rejigger Your Holdings


BusinessWeek asked three top financial advisers how they would invest $250,000 for moderate growth over the next five to seven years. Here's the way they'd do it

Barry Glassman, Senior Vice-President, Cassaday & Co., McLean, Va.

RATIONALE

Glassman offers a conservative portfolio for stability. But stable doesn't mean boring in his case: He's drawn to the higher yields in select bonds as well as real-estate investment trusts (REITs). To minimize the risk, he prefers the funds that use hedging strategies in currencies and equities.

RECOMMENDATION

Glassman's mix is 45% stocks, 30% bonds, 10% REITs, and 15% cash. The portfolio anchor is $37,500 in five-year certificates of deposit, yielding 5%. In the bond allocation, put $37,500 in MainStay High Yield A (MHCAX), yielding 7.85%, and $25,000 in Templeton Global Bond A (TPINX), currently betting against the euro. Another $25,000 chunk goes in T. Rowe Price Real Estate (TRREX), yielding 4%.

In equities, invest $37,500 in the Gateway Fund (GATEX), which uses options strategies in order to generate income. Put an additional $37,500 in Primecap Odyssey Stock. It focuses on midsize and smaller companies. The remainder of the portfolio should go into U.S. and foreign stocks, with 5% invested in intermediate-term Treasuries.

Cliff Caplan, President, Neponset Valley Financial Planners, Norwood, Mass.

RATIONALE

Caplan allocates more than half of the portfolio to international equities, bonds, and currency plays to capitalize on an expected rebound in commodities. In equities, he tilts toward growth managers. In bonds, he likes municipal debt.

RECOMMENDATION

Caplan spreads 60% in stocks, 20% in bonds, 5% in cash, and 15% in alternative assets. Put $37,500 each in Julius Baer International Equity II and Ivy Asset Strategy, which invests in wide range of assets. A further $12,000 in Pimco Developing Local Markets (PDEVX). What's left goes in bonds and stock funds.

Debra Brede, President, D.K. Brede Investment Management, Needham, Mass.

RATIONALE

In volatile markets, Brede prefers experience, especially in fixed-income. So her model portfolio uses active mutual fund managers, often with a value bent, instead of passive index funds. She's also tilted toward large-cap growth stocks.

RECOMMENDATION

Brede's allocation is 60% stocks and 40% bonds. The heart of the portfolio is big-cap stock funds—$25,000 in each of the Fidelity Advisor New Insights, Hartford Capital Appreciation, and American Funds EuroPacific Growth funds. For the fixed-income part, put $35,000 in Loomis Sayles Bond, another $35,000 in Pimco Total Return, and $30,000 in Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX). The rest of the mix should include mid-cap growth stock funds.

For the full portfolios and more recommendations, go to businessweek.com/investor/insights/blog

Young is a Personal Business editor for BusinessWeek .

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