Seeking Income

A Flexible Core for Your Portfolio

Investment strategies that worked over the last 15 or 20 years may not necessarily work today if you are seeking income. We leverage our best thinking to help today’s income investors take advantage of the broadening investment landscape, while addressing their tolerance for risk and need for current income.

Consider Additional Asset Classes

As globalization continues, and the world’s economies become more integrated, opportunities across different sectors, regions, and countries also change. We believe that investors may potentially find attractive sources of potential income beyond traditional asset classes. If you are an income investor, and you’re interested in learning more about developing additional sources of cash-flow, talk to your financial advisor about asset classes such as local- and dollar-denominated emerging market debt as one potential way of enhancing income and diversifying risk.

Emerging markets securities may be less liquid and more volatile and are subject to a number of additional risks, including, but not limited to, currency fluctuations and political instability.

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Emerging Markets Often Exhibit Greater Growth than Developing Markets

Advanced Economies - Debt Increasing

Emerging Economies - Debt Decreasing

A Strategic Approach to Cash Flow

Developing a managed portfolio of dividend-paying stocks is a dynamic, flexible strategy has the potential to bring opportunities for added income in any market environment. But different equities exhibit different characteristics, and it takes a dedicated teams of investment managers to keep things in balance. We believe diversifying with companies that have historically consistently paid and grown dividends, alongside other innovative ways of sourcing income, may potentially provide a steady income stream and provide long-term growth.

Investing in stocks, even those that pay regular dividends, may not be suitable for all investors. Equities are typically more volatile than debt instruments (bonds and fixed income products) and are subject to additional risks, including, but not limited to, loss of capital.

Dividends Have Historically Offered Income and Long-Term Growth

$10,000 hypothetical investment (January 31, 1972 – December 31, 2018)

Building a Flexible Core

If you are seeking income from your investments, we will demonstrate that opportunities are present in any interest rate environment. By including a flexible, multi-asset class strategy into your core portfolio, you could potentially realize additional income opportunities, and help to reduce risk. Depending on your financial goals, objectives, and risk tolerance, you might be able to increase your income by diversifying your fixed income portfolio with different types of fixed income products. If you are an income investor, your financial adviser will talk to you about core development.

Dividends Have Historically Offered Income and Long-Term Growth

Go Tax-Free With Municipal Bonds

Some municipals offer greater after-tax yields than treasuries. In addition, adding municipal products with varying yields, issuers, and maturities may help generate tax-free income and diversification within your portfolio. When interest rates rise, bond prices will fall. Municipal bonds might make sense if you are in income investor with tax-considerations. Municipal bonds and their income may be subject to the federal alternative minimum tax and state income tax. Municipal bonds may be adversely impacted by changes in tax law rates and policies, and are not suited for IRAs or other tax exempt or deferred accounts.

Investing in municipal bonds is usually considered safer than in dividend-paying stocks. However, tax-free bonds may exhibit higher levels of risk as compared to U.S. government bonds, and therefore, may not be suitable for all investors.

Depending on your tax-bracket, municipal bonds might pay a higher after-tax yield than corporate bonds or other types if fixed-income products

Taxable Equivalent Yield - non-Municipal Bonds

Taxable Equivalent Yield -Municipal Bonds

*Source: IMF, as of April 2012. Past performance does not guarantee future results, which may vary. Developed economies: US, Euro Area, Japan, UK, Canada, other advanced economies. Emerging and Developing Economies: Central and Eastern Europe, Commonwealth of Independent States, developing Asia, Latin America and the Caribbean, Middle East and North Africa, Sub-Saharan Africa.This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. Please see additional disclosures and discuss with your investment manager.

Source: Ned Davis Research, Morningstar. Past performance does not guarantee future results, which may vary. This hypothetical is for illustrative purposes only, and does not represent the performance of any specific product. Both Dividend-Paying and Non-Paying dividend stocks are defined by each stock’s dividend policy, which is determined on a rolling 12-month basis by the underlying company. In this example, a stock’s return is only included during the period in which it is included as a component of the S&P 500 Index. The dividend figure used to categorize the stock is the company’s indicated annual dividend, which may differ from the actual dividends paid during a particular month. Dividends are not guaranteed and a company’s future ability to pay dividends may be limited.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. Please see additional disclosures and discuss with your investment manager.

Past performance does not guarantee future results, which may vary.*Source: GA Research. Tax equivalent yield is the yield a taxable investment needs to possess (before taxes) for its yield to be equal to that of a tax-free municipal investment. The rate shown is based on a federal rate of 35%. Chart provided for illustrative purposes and is not indicative of the past or future performance. Short-Term Bonds: Taxable is derived from Bellwethers 3-Yr Index and Tax Exempt by Barclays Municipal Index 3-Yr. Intermediate Term Bonds: Taxable is derived from a 50% Bellwethers 2-Yr Index and 50% 10-Yr Bellwether Index and tax exempt is derived from Barclays Municipal Aggregate Bond Index. High Yield Bonds: taxable is derived from 60% Barclays US High Yield Corporates Index and 40% Barclays Municipal Aggregate Bond Index.

*Source: Data as of 6/30/12. US Government represented by the Barclays US Government Index, US Investment Grade Corporates by the Barclays US Corporate Investment Grade Index, High Yield Loans by the Barclays US High Yield Loans Index, Emerging Markets Debt by the JPM EMBI Global Diversified Index, High Yield Bonds by the Barclays US High Yield Index. Investments in foreign and emerging market securities, which may be more volatile and less liquid than investments in U.S. securities, will be subject to the risk of currency fluctuations and adverse economic and political developments.

This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be considered research or investment advice. Please see additional disclosures and discuss with your investment manager.