An investment portfolio is a collection of different investment assets. With Guideline, you can choose between six different professionally managed portfolios, or create your own.
Guideline’s investment portfolios all comprise the same basket of funds – with the only difference being the proportion of assets allocated to each fund, depending on how aggressive or conservative the portfolio is intended to be. For example, our “Conservative” portfolio contains a higher proportion of bonds and fewer stocks, while the “Very Aggressive” portfolio has fewer investments in bonds and a higher proportion in stocks.
This strategy is called asset allocation, and it aims to provide a different mix of the same investments to suit varying participant risk tolerances and time horizons until retirement.
Equity vs. Fixed Income assets
In order to take advantage of the power of asset allocation, Guideline splits the assets within your portfolio between equity assets and fixed income assets, based on how aggressive or conservative you want your portfolio to be.
Any investments intended to grow your portfolio long-term, despite short-term risk, are referred to as “equity” assets. These will include almost all equity assets, such as US and international stocks. Equity assets are referred to as more aggressive because they tend to be higher risk, higher reward and tend to earn greater rates of return over the long haul.
On the other hand, “fixed income” assets refer to those investments that are not correlated with the general equities markets, such as bonds, real estate, commodities, and other alternatives. These investments usually provide steady income regardless of market changes, or may hold up better in the short-term when the general stock market does poorly. Fixed income assets are referred to as more conservative because they are lower risk, lower reward, and are less likely to be affected by changes in the general market.
Where can I see what’s in each portfolio (the asset allocation)?
If you’re a current Guideline participant, you can see the particular asset allocations for each Portfolio in your Guideline dashboard. Just click "Change Portfolio" in Your Portfolio, and click the View All Portfolios link.