The investments in Christian’s portfolio are made mostly through Russell mutual funds (a core fund family that holds both growth and value stocks.) In addition, her portfolio is diversified through real estate investment trusts, or REITS. Real estate has some of the characteristics of stocks (potential upside) and some of the characteristics of bonds (relatively high yields) and often acts as a non-correlating asset because gains and losses tend to be unrelated to moves in stocks or bonds.
Christian is happy with her portfolio’s performance. “I did really well,â€ she says, “so I became a little more aggressive.â€ Grant recently retested her and found that she now has a “balancedâ€ risk tolerance. As a result, “We have reset her asset targets and moved her portfolio to more stocks and fewer bonds.â€