Spectrum has been trading high yield bonds for well over 30 years, and in fact, our first quarterly The Full Spectrum newsletter was published in January 1988. Every single newsletter since then (this is #125) has had our philosophy printed on the last page: “Steady plodding brings prosperity; hasty speculation brings poverty.” (Proverbs 21:5)
Our actual track record can be seen in the chart at the end of this post, and it is compared to the WSJ Avg. US Stock Fund Index for the past 29 years. We have discovered that preservation of principal is key to compounding wealth. We have asked ourselves over the years “why take risks in volatile stocks when we can produce comparable returns trading high yield bonds?”
Years with modest returns may seem boring to some, but over time, compound interest produces exponential growth. A $10,000 investment in 1989 would be worth about $160,000 today.
While this chart does not assure what might happen in the future, it is significant to observe the fact that our maturity and experience trading high yield bonds should give investors confidence that we may continue to produce meaningful returns while reducing risk. An investor should not invest in anything where the risk involved can change his or her lifestyle or standard of living. We have implemented these strategies in all the funds we manage to attempt to produce positive returns while minimizing risk.
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High Yield Bond Strategy performance calculations are based on actual client accounts having dividends reinvested, no purchases or withdrawals during the period, and may have been obtained from personal or related accounts. The management fee is .48% per quarter beginning 12/31/10 to present, prior .50% and is reflected in the calculated performance. The initial commission on funds is not taken into account but could reduce performance. Some performance may vary due to fund restrictions and/or limitations imposed by the mutual fund families. Past performance does not guarantee future results. Current performance may be lower or higher than data quoted. Investors should obtain the fund prospectus and read it carefully to evaluate the fund's investment objectives, risks, charges, and expenses before investing. The WSJ’s Avg. Stock Fund Index (an arithmetic average of all US domestic equity mutual funds) is used as a comparison.