JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Examination of Fixed Income Securities Pooled with the S&P Index for Retirement Diversification: From Convertibles to Treasuries to Cash Alternatives
Author(s): Armand Picou
Citation: Armand Picou, (2021) "Examination of Fixed Income Securities Pooled with the S&P Index for Retirement Diversification: From Convertibles to Treasuries to Cash Alternatives," Journal of Applied Business and Economics, Vol. 23, Iss.2, pp. 35-44
Article Type: Research paper
Publisher: North American Business Press
Abstract:
We examine the returns of retirement portfolios containing a diversified stock selection and various fixed income combinations to determine the best risk return tradeoffs for the 10 years 2010 -2019. The classic 60/40 Equity/Debt holds the track record for delivering returns while reducing risk. For comparison, we test for the optimal mix and 70/30, 80/20 among others; for the 10 years in the study. The lowest risk return combinations for a 60/40 mix were found; with Municipal Securities dominating followed by Preferred Stocks, US High Yield, and Convertibles. The worst performing 60/40 combinations were made with International Bonds, Treasury Bills, and Government Bonds excluding U.S.