Page 19 - Investment Advisor - December 2023

I bonds, Battmer suggested, although stock side, not the riskier end of the is also a good time to take advantage of
Creative Planning typically prefers to bond market, the CIO said. high short-term rates, Varghese said.
be owners, through equities, rather than I bonds’ floating-rate component, Luskin Financial Planning owner
creditors — even with stock risk pre- unlike the fixed rate, isn’t locked in John Luskin suggested I bonds may not
miums compressing. “If this will some- beyond six months from the purchase warrant the effort involved in buying
how allow an investor to sleep better at date. “If inflation falls — especially gas and them. “I bonds are perfectly fine. Yet,
night” and reduce the risk that they’ll food prices — the interest received goes I’m not sure if the juice is worth the
hit the panic button when markets are down,” Carson Group’s Sonu Varghese, squeeze. There’s only so much you can
volatile, “then we would buy. And, adding bonds
absolutely be comfortable “I bonds are perfectly fine. Yet, I’m not sure to your portfolio is not
with it,” he said. if the juice is worth the squeeze. There’s going to radically impact
In any year, an individ- your investment return,”
ual can buy a maximum only so much you can buy. And, adding he explained.
$10,000 in electronic I bonds to your portfolio is not going to “Moreover, you’ve got
bonds and, by using their radically impact your investment return.” the complexity of hav-
tax refund, up to $5,000 ing to manage another
in paper bonds. For cli- —John Luskin account — and the funky
ents with big portfolios, Treasury Direct web-
the purchasing restrictions may limit I global market strategist, explained. site,” Luskin said. “Finally, most folks I
bonds’ ability to make a big difference, Carson Group recommends Treasury work with have much more urgent and
Battmer said. Those with smaller portfo- bills, with even 6-month T-bills now important projects than buying I bonds,
lios could take on some financial stress if offering a higher yield around 5.5%, he such as doing their estate planning or
I bonds accounted for 10% or more, given said. “They’re also more liquid, since I buying umbrella insurance. Since time
rules that can limit liquidity, he added. bonds lose the last three months of inter- and energy are limited, I’d rather they
I bonds aren’t as liquid as other conser- est if you sell within five years.” With the do those more pressing projects first.”
vative instruments, which can create risk Fed likely to hold off on rate cuts, this —dinah Wisenberg Brin
for people across the socioeconomic land-
scape, according to Battmer, who suggest-
ed there are more effective instruments to At dFA, etFs signal end of exclusivity
generate higher, long-term returns.
The 60% stock, 40% bond portfolio Dimensional Fund Advisors, which another post congratulating DFA on its
“is more alive than ever,” he said, not- offers its mutual funds exclusively new global stock ETF.
ing that great, high-quality, investment- through approved financial advi- By launching its World Equity ETF
grade bonds are available in the market sors, has opened access to largely the and Ultrashort Bond ETF last month,
more broadly, as well as high-rate cer- same investments through its recently Dimensional, which introduced its first
tificates of deposit. expanded exchange-traded fund lineup, ETFs in 2020, now offers investors
Bonds, both corporate and govern- experts noted recently. access through an ETF “wrapper” to
ment, are yielding returns that can be “DFA ‘gatekeeping’ is over. Advisors virtually the same assets packaged in its
built into an effective withdrawal strat- who sell on access to DFA will need a mutual funds, Miller said.
egy, rather than simply acting as shock new spiel. 99% of DFA’s useful lineup Dimensional announced in the fall
absorbers, as they have in the past, will be unrestricted in the ETF wrap- that it was adding seven new ETFs,
Battmer said. These instruments are per,” Rubin Miller, advisor and founder including the newly listed Ultrashort
huge positives for investors in the long at Peltoma Capital Partners, posted on Fixed Income ETF (NYSE Arca: DUSB)
run, and more attractive today than they X in September as Dimensional pre- and World Equity ETF (NYSE Arca:
were 18 to 24 months ago, he added. pared to launch two new ETFs. DFAW). The company expects to end
It’s much easier to get access to money “I can’t wait. I love the funds and I this year with 38 ETFs and to roll out
in a low-cost aggregate bond ETF, which love democratized access for all inves- others in the future. The two recently
isn’t as dramatically attached to infla- tors,” Miller, a former DFA regional added funds had been “glaringly miss-
tion, Battmer said. In general, Creative director and current client, added. ing” from Dimensional’s ETF offerings,
Planning prefers to take its risks on the “No more barriers to entry,” he said in Miller said in a recent interview.

December 2023 Investment AdvIsor 17