Sales Ideas > Morningstar Advisor

Morningstar Advisor Magazine February/March 2010 Issue

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Advance client relations with educational, informative and detailed FINRA reviewed sales ideas. These one-page investment concept hand-outs serve as an effective resource that help facilitate ongoing communication and strong relationships with clients. Partner with a third party resource that investors respect and discover the benefits of Morningstar Advisor Sales Ideas. Educate your clients, save time, focus on client relationships, and enhance marketing efforts.

Keep Your Balance
Asset allocation is highly dependent on an investor's risk tolerance, goals and time horizon. Once the appropriate asset allocation is determined and the portfolio created, an investor has to monitor the portfolio periodically to ensure the initial allocation is maintained through portfolio rebalancing. Because some asset classes can grow faster than others, a portfolio that is not rebalanced may evolve to have different allocations over time, which is dangerous because then the investor may be exposed to higher risk. The image illustrates the evolution of a 25% stock-75% bond portfolio with and without rebalancing over the past 20 years.

April 2010 | Baby Steps

Deciding when and how much to invest can be a difficult task, especially since market movements are always hard to predict. Instead of trying to time the market and exposing their portfolios to additional risk, investors should consider a dollar-cost averaging strategy. Dollar-cost averaging simply means investing equal amounts of money at fixed intervals, for example, $200 every month. The image illustrates how, by employing a dollar-cost averaging strategy, investors can purchase more shares of an asset when the price is low and fewer shares when the price is high.

May 2010 | Mixed Income

Portfolio diversification is certainly an important investment concept, but many investors forget that there are two main types of diversification: among asset classes and within a particular asset class. This sales idea illustrates the diversification potential available within the fixed-income universe. The image presents annual returns for the time period 1995-2009 for nine types of fixed-income investments, including government, corporate, municipal, international and aggregate bonds.

February 2010 | Cash on the Sidelines

In uncertain economic times, investors tend to follow the most basic of philosophies: protect your money. Investments that offer maximum protection include money market funds and short-term fixed-income vehicles. Record levels of assets in money market funds have recently resulted in a great deal of "cash on the sidelines," which generates little interest income and offers limited potential for long-term growth. A possible solution to this problem is to diversify into other fixed-income investments, such as intermediate- or long-term bonds. The image compares the risk and return of money market funds with those of various types of bonds for 3-year, 5-year and 10-year time periods.

January 2010 | Reality Check

When looking at the performance of an investment, the reported return numbers usually measure total returns, which assume investors purchased and held the security for the entire time period analyzed. However, real returns to investors rarely match the reported total return numbers, which is why Morningstar developed investor returns to measure how a typical investor would perform over time. The image compares average investor returns for equity and fixed-income mutual funds to stock and bond market returns over the past 1, 3, 5 and 10 years, and demonstrates how investor returns can be drastically different from overall market performance.

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