From an Article titled “Lifeplan: Upgrade your Portfolio”.  From the SmartMoney website, part of the Wall Street Journal Digital Network. 

This article goes over some of the fundamentals and latest trends related to portfolio construction, asset allocation, and fixed-income. 


-Although stocks and bonds remain the pillars of any portfolio, some investors look to add certain “alternative asset classes” to their portfolio.  These include commodities, infrastructure, income trusts, and precious metals through the purchase mutual funds. 

-The benefits of these classes of funds is they offer low correlation to equity funds.  They tend to do well when equity funds go down. .

-Young investors should still load up on equity funds, as high as 80% of their total portfolio

-Interest rates have nowhere to go but up and the simple rule of thumb with bonds is that when interest rates go up, bond prices go down.  Fixed-income fund investors should be paying attention to the average bond duration in the fund.  The shorter the duration, the less sensitive the fund will be to rate increases.  The corporate and real-return bond weighting is also important as these tend to perform better in a rising-rate or inflationary environment.