Generating investment income is a goal for many investors, especially for those in or approaching retirement. Unfortunately, most investors who seek income do a poor job of it. They are often poorly diversified (64% of income investors own three or fewer stocks*), or generate low yields by investing in cash and bonds, and almost always have US home-country bias.
With that in mind, the investment team at SigFig set out to create a well-diversified portfolio with a generous income stream while managing risk. Today, we are excited to unveil SigFig Diversified Income, a portfolio that is designed to target a 4% income yield by blending eight different income-generating ETFs. By diversifying across many asset classes and geographies, our Diversified Income portfolio provides 4% gross annualized yield** with half the volatility of the S&P 500.
Unlike traditional wealth management firms who frequently have high minimums of $1 million or more and charge high fees of over 1%, the SigFig Diversified Income portfolio has a minimum investment requirement of $100,000 and management fees of 0.50% which include all trading commissions. And unlike bonds and CDs, which can be hard to sell before they mature or are subject to early withdrawal penalties, our Diversified Income portfolio can be sold at any time, for any reason.
At SigFig, our mission is to help investors improve their portfolios by balancing risk and return and minimizing fees. With this product, investors who seek income can do so at reduced volatility and at very low cost.
Want to know more? Click here to speak with a SigFig Investment Advisor, who will answer any questions you may have.
* Data is from investors who have synced their investment portfolios with SigFig who are 40+ years old with at least 30% of the portfolio in dividend stocks or AGG/BOND/TIP. Historical data to calculate yields and volatility are from Yahoo Finance and Google Finance.
** Target yield of 4% is net of underlying fund expense ratios and gross of management fees. Since its inception 5/31/2012, the Diversified Income portfolio has gross annualized yield of 4.3% and net annualized yield of 3.8%.
Additional disclosures: Target returns are based on model performance and do not represent actual client accounts. There are inherent limitations with model portfolios, such as the limited impact of market factors related to executing trades or liquidity, among other limitations. The target results are not an indicator of the returns a client would have realized or will realize in relying on the Diversified Income portfolio. Past performance is no guarantee of future return. All investments carry a degree of risk. For more information and disclosures, please visit https://www.sigfig.com/l/terms.
Terry Banet is SigFig’s Chief Investment Officer. With over 25 years of investment experience, Terry has held senior investment management and private banking positions at JPMorgan and USTrust.