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Insights represent Kings Point Capital Management’s views on important topics affecting both individual and institutional investors.

Bond Fund Issues

Bond mutual funds and exchange traded funds (ETFs) have an under-appreciated amount of risk. Fixed Income is an important part of an asset allocation, but it carries an inherent expectation of return of principal. Bond funds and ETFs do not have a maturity date or guaranteed return of principal. In addition, the market structure has created a dealer liquidity problem that could exasperate the downward move in bond fund net asset values (NAV) when interest rates rise.

Over Diversification

Many investors use mutual funds with exposure to hundreds or even thousands of stocks.  We believe that proper equity diversification can be achieved by owning a portfolio of 20-30 stocks.  An investor may be better served with a focused portfolio than owning thousands of stocks.

Fiduciary Advisor

There are two broad types of advisors:  1) Fiduciary or 2) Commissioned sales representative.  A fiduciary is typically found in an independent, Registered Investment Advisor, that is not compensated through sales commissions or trading activities.  A commissioned sales rep works in a broker-dealer environment and may be compensated through incentive payments or commissions on products recommended.