This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fixing Fixed Income

NEW YORK ( TheStreet) -- Whenever I visit a big mutual fund or brokerage company, it's easy to spot who works on the fixed income (bonds) side of the house and who works on the equities (stocks) side of the house. To put it bluntly, the bond guys (and gals) are less emotional than their brethren working equities.

Perhaps this is as it should be. After all, the pricing of bonds logically follows changes in interest rates, coupled with an analysis of cashflow to service the debt. A company can either pay its debts or it can't. Stock jockeys on the other hand pair their fundamental analysis with squishy terms like "momentum," and "sentiment" and "resistance levels."

Because of this, investing in stocks is easier and more fun (even when you are wrong, stocks can still go up, and you are right!) than investing in bonds.

However, a company I introduced to my readers a few weeks ago, Motif Investing, is changing this. In June, the company launched about 50 intuitive indices (called motifs), that investors could buy cheaply and, adjust -- or not -- according to their own analysis.

Adjusting according to preference is a powerful notion. For example, who wouldn't want to fine tune their S&P 500 index holdings to bulk up on Apple (AAPL) (up about 58% YTD) and pare Electronic Arts (EA) (off about 33% YTD)?

Now the company has introduced fixed income, or bond motifs, that give investors the same intuitive, flexible and low cost solutions for the fixed income portion of their portfolios. The importance of this cannot be underestimated. After all, most portfolios consist of stocks, bonds and cash. Therefore, with the introduction of fixed income products, little Motif Investing is offering most investors a comprehensive low cost solution.

The fixed-income motifs are comprised of bond ETFs, and they offer the same targeted solutions coupled with the ability to adjust the holdings. For instance the AMT-Free Munis motif allows investors who are typically snagged by the Alternative Minimum Tax to sidestep the prehensile hand of the feds by avoiding bonds and ETFs with so-called private activity debt issuances that could generate income subject to the AMT.

The portfolio is arranged across durations from less than one year to more than 10, with three in between equally weighted at 20%. If you believe interest rates are going down or will stay the same then you might want to lengthen the duration/maturity of your bonds.

Investing is hard work. And investing in bonds and other fixed income investments is harder still. However, Motif Investing simplified the process and enables average investors to build bond portfolios with above-average intelligence.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs