Old tricks still work

Advisors with nervous clients might be tempted to look for a fancy fix to calm their clients’ fears, but there’s still hope in traditional investments. Money Magazine‘s Carolyn Bigda and Paul J. Lim point out some investing trends that might seem right at first, but could leave investors wishing they’d followed their instincts rather than the crowd.

Some clients may be eager to trade their indexed funds for something with a higher rate of return, or drop their bonds to avoid rising inflation. Fundamental indexes weight stocks based on alternative measures like dividends rather than market value, but these funds can lean towards stocks with low price-to-ratio earnings. And despite rising inflation, bonds will always be an important part of your clients’ portfolios.