2019 marked the 28th year of performance history for Kensington’s flagship Managed Income
Strategy. To the surprise of most observers, high-yield bonds turned in a very respectable performance for the year. Despite numerous warnings early in 2019 to stay clear of these bonds because of the concern the bull market was in its terminal stage and a recession might be on the horizon, the sector defied conventional thinking and continued to march higher.
The frequency of inaccurate forecasts by financial pundits is cause to reflect on the way many financial advisors and investors implement investment management. The process of investing money entails a complex web of analysis and judgement that is laden with pitfalls. The complexity of designing an investment strategy that can navigate the ups and downs of the market while focusing on those asset classes that are appropriate for a given time is challenging. An additional challenge is to achieve desirable returns while keeping downside risk to a tolerable level.
A good investment plan strives to maximize success and minimize disappointment. The goal of Kensington’s Managed Income Strategy is to protect against the dangers of recklessly reaching for high returns, but more importantly, minimize the damage that periodic adverse market conditions inflict on most investment plans. The Strategy’s 28-year track record, with never as much as a 5% drawdown of principal and just two losing years, is quite compelling. It takes steady and consistent positive returns without the anxiety of experiencing a jarring losing year to give the investor the
confidence and peace of mind to remain committed to a long-term investment plan. Don’t get distracted if the S&P 500 pulls away with an occasional banner year. The day will come when a bear market causes the S&P to experience a major correction. Managed Income navigated the last two bear markets, which were two of the worst in history. This is why we believe the strategy will provide the opportunity for clients to be protected from large drawdowns, even in dangerous market environments.