The Case for Defensive Investing
George Fischer reviews how the defensive portfolios are designed for investors who struggle to stay invested in down markets.
Views expressed are as of July 31, 2022 and are subject to change at any time based on market and other conditions. Data is unaudited. Information may not be representative of current or future holdings.
Neither asset allocation nor diversification ensures a profit or protects against a loss.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Past performance does not guarantee future results.
Endnote 1: To review complete performance information see, A Defensive Approach Can Help You Weather Market Downturns (PDF)
Performance returns represent the asset-weighted performance of Fidelity® Wealth Services ("FWS") client accounts managed without tax-sensitive strategies using the same investment approach, universe, and asset allocation strategy (each, a "Composite Portfolio"). Returns for individual clients will vary. Each line represents the growth of a $100,000 initial investment. Based on the performance of a composite of accounts managed using the following strategy characteristics. Total Return: Growth with Income asset allocation the total return investment approach and blended investment universe. Defensive: Growth with Income asset allocation and the defensive investment approach and blended investment universe. Please speak to your Fidelity representative for information about the performance of other strategy characteristics available through the program.
Performance returns represent the asset-weighted performance of Fidelity® Wealth Services ("FWS") client accounts managed without tax-sensitive strategies using the same investment approach, universe, and asset allocation strategy (each, a "Composite Portfolio"). Returns for individual clients will vary. Each line represents the growth of a $100,000 initial investment. Based on the performance of a composite of accounts managed using the following strategy characteristics. Total Return: Growth with Income asset allocation the total return investment approach and blended investment universe. Defensive: Growth with Income asset allocation and the defensive investment approach and blended investment universe. Please speak to your Fidelity representative for information about the performance of other strategy characteristics available through the program.
Market indexes are included for informational purposes and for context with respect to market conditions. All indexes are unmanaged, and performance of the indexes includes reinvestment of dividends and interest income, unless otherwise noted. Review the definitions of indexes for more information. Please note an investor cannot invest directly into an index. Therefore, the performance of securities indexes do not incorporate or otherwise reflect the fees and expenses typically associated with managed accounts or investment funds.
Important information about performance returns. Performance cited represents past performance. Past performance, before and after taxes, does not guarantee future results and current performance may be lower or higher than the data quoted. Investment returns and principal will fluctuate with market and economic conditions, and you may have a gain or loss when you sell your assets. Your return may differ significantly from those reported. The underlying investments held in a client’s account may differ from those of the accounts included in the composite. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
Before investing in any investment product, you should consider its investment objectives, risks, and expenses. This material has been prepared for informational purposes only and is not to be considered investment advice or a solicitation for investment. Information contained in this report is as of the period indicated and is subject to change. Please read the applicable advisory program’s Form ADV, Part 2A Brochure, available from a Fidelity advisor or at Fidelity.com/information.
Before investing in any investment product, you should consider its investment objectives, risks, and expenses. This material has been prepared for informational purposes only and is not to be considered investment advice or a solicitation for investment. Information contained in this report is as of the period indicated and is subject to change. Please read the applicable advisory program’s Form ADV, Part 2A Brochure, available from a Fidelity advisor or at Fidelity.com/information.
Information about the calculation of account and composite returns. Returns for periods of one year or less in duration are reported cumulative. Returns for periods greater than one year may be reported on either a cumulative or average annual basis. Calendar year returns reflect the cumulative rates of return for the 12-month period from January 1 to December 31, inclusively, of the year indicated.
Reported rates of return utilize a time-weighted calculation, which vastly reduces the impact of cash flows. Returns shown assume reinvestment of interest, dividends, and capital gains distributions. Assets valued in U.S. dollars. Performance includes accrued interest for certain securities when provided by a third-party vendor; otherwise, performance returns are computed on a cash basis. Performance will be understated for periods when accrued interest information is not available. For accounts with individual bonds, amortization and accretion for bonds are not included in performance calculations. Performance reporting generally begins after the portfolio manager reviews the account and deems it ready for investment in the chosen strategy.
Net rates of return are calculated to include the deduction of the actual (net of any applicable fee credits) investment advisory fees paid for each account including any applicable separately managed account sleeve fees (“sleeve fees”), and any underlying fund's own management fees and operating expenses. If applicable, gross rates of return are presented with net rates of return to help you understand the overall effect of investment advisory fees on performance. Gross rates of return are calculated without the deduction of investment advisory fees paid for each account (including sleeve fees) but are net of any underlying fund’s own management fees and operating expenses. Strategic Advisers LLC (“Strategic Advisers”) includes performance from the time period when the program was offered by Fidelity Personal and Workplace Advisors LLC and subadvised by Strategic Advisers (other than the bond strategies offered through FSD) from July 2018 through March 2025 and for legacy programs offered by Strategic Advisers prior to July 2018. Fee schedules for these legacy programs differ from current fee schedules, and fees for accounts enrolled in those legacy programs may have been higher or lower than Strategic Advisers' current fees. Fee structures and services offered have changed over time. Please consult a Fidelity financial advisor or the applicable investment advisory program’s current Form ADV, Part 2A Brochure for current fee information. Additional information about our methodology for calculating pre- and after-tax performance return information is available at Fidelity.com/information in a document titled “About Managed Account Performance.”
Reported rates of return utilize a time-weighted calculation, which vastly reduces the impact of cash flows. Returns shown assume reinvestment of interest, dividends, and capital gains distributions. Assets valued in U.S. dollars. Performance includes accrued interest for certain securities when provided by a third-party vendor; otherwise, performance returns are computed on a cash basis. Performance will be understated for periods when accrued interest information is not available. For accounts with individual bonds, amortization and accretion for bonds are not included in performance calculations. Performance reporting generally begins after the portfolio manager reviews the account and deems it ready for investment in the chosen strategy.
Net rates of return are calculated to include the deduction of the actual (net of any applicable fee credits) investment advisory fees paid for each account including any applicable separately managed account sleeve fees (“sleeve fees”), and any underlying fund's own management fees and operating expenses. If applicable, gross rates of return are presented with net rates of return to help you understand the overall effect of investment advisory fees on performance. Gross rates of return are calculated without the deduction of investment advisory fees paid for each account (including sleeve fees) but are net of any underlying fund’s own management fees and operating expenses. Strategic Advisers LLC (“Strategic Advisers”) includes performance from the time period when the program was offered by Fidelity Personal and Workplace Advisors LLC and subadvised by Strategic Advisers (other than the bond strategies offered through FSD) from July 2018 through March 2025 and for legacy programs offered by Strategic Advisers prior to July 2018. Fee schedules for these legacy programs differ from current fee schedules, and fees for accounts enrolled in those legacy programs may have been higher or lower than Strategic Advisers' current fees. Fee structures and services offered have changed over time. Please consult a Fidelity financial advisor or the applicable investment advisory program’s current Form ADV, Part 2A Brochure for current fee information. Additional information about our methodology for calculating pre- and after-tax performance return information is available at Fidelity.com/information in a document titled “About Managed Account Performance.”
Information about composite returns. The rates of return featured for accounts managed to a long-term asset allocation represent a composite of accounts managed with the same long-term asset allocation, investment approach and investment universe as applicable; rates of return featured for accounts managed with a single asset class strategy represent a composite of accounts managed to the applicable strategy. Accounts included in the composite utilize a time-weighted calculation, which vastly reduces the impact of cash flows. Composites are asset-weighted. An asset-weighted methodology takes into account the differing sizes of client accounts (i.e. considers accounts proportionately). Larger accounts may, by percentage, pay lower investment advisory fees than smaller accounts, thereby decreasing the investment advisory fee applicable to the composite and increasing the composite’s net-of-fee performance. For tax-smart accounts in Fidelity Wealth Services, composite results are based on the returns of the managed portion of the accounts; assets in a liquidity sleeve are excluded from composite performance.
Composites set minimum eligibility criteria for inclusion. Accounts with less than one full calendar month of returns and accounts subject to significant investment restrictions are excluded from composites, (including fixed income strategies offered through Fidelity Strategic Disciplines with a state preference option). Accounts with a do-not-trade restriction are removed from the composite once the restriction has been applied to the account for thirty days. For periods prior to October 1, 2022, composite inclusion required a minimum investment level that reflected product-relative investment requirements. Effective October 1, 2022, product composites will reflect all accounts for which we produce a rate of return and that meet the aforementioned criteria. Non-fee paying accounts, if included in composite, will increase the net-of-fee performance. Certain products, like Fidelity Go, offer investment services where accounts under a certain asset level do not incur investment advisory fees. Employees do not incur investment advisory fees for certain products.
Composites set minimum eligibility criteria for inclusion. Accounts with less than one full calendar month of returns and accounts subject to significant investment restrictions are excluded from composites, (including fixed income strategies offered through Fidelity Strategic Disciplines with a state preference option). Accounts with a do-not-trade restriction are removed from the composite once the restriction has been applied to the account for thirty days. For periods prior to October 1, 2022, composite inclusion required a minimum investment level that reflected product-relative investment requirements. Effective October 1, 2022, product composites will reflect all accounts for which we produce a rate of return and that meet the aforementioned criteria. Non-fee paying accounts, if included in composite, will increase the net-of-fee performance. Certain products, like Fidelity Go, offer investment services where accounts under a certain asset level do not incur investment advisory fees. Employees do not incur investment advisory fees for certain products.
Additional Information. Changes in laws and regulations may have a material impact on preand/or after-tax investment results. Strategic Advisers LLC relies on information provided by clients in an effort to provide tax-smart investing techniques. Strategic Advisers LLC can make no guarantees as to the effectiveness of the tax-smart investing techniques applied in serving to reduce or minimize a client’s overall tax liabilities or as to the tax results that may be generated by a given transaction. Strategic Advisers does not provide tax or legal advice. Please consult your tax or legal professional for additional guidance. For more information about Strategic Advisers and its advisory offerings, including information about fees and investment risks, please visit our website at Fidelity.com.
The information contained herein includes information obtained from sources believed to be reliable, but we do not warrant or guarantee the timeliness or accuracy of the information as it has not been independently verified. It is made available on an "as is" basis without warranty.
The information contained herein includes information obtained from sources believed to be reliable, but we do not warrant or guarantee the timeliness or accuracy of the information as it has not been independently verified. It is made available on an "as is" basis without warranty.
This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation would be unlawful. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. No assumptions should be made regarding the manner in which a client’s account should or would be handled, as appropriate investment strategies will depend upon each client’s investment objectives. None of the information contained herein takes into account the particular investment objectives, restrictions, tax or financial situation, or other needs of any specific client. Certain strategies discussed herein give rise to substantial risks and are not suitable for all investors. The information contained in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. The information provided by third parties has been obtained from sources believed to be reliable, but Strategic Advisers LLC. makes no representation as to its accuracy or completeness. Statements concerning financial market trends are based on current market conditions, which will fluctuate.
Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.
The S&P 500® Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.
Indexes are unmanaged. It is not possible to invest directly in an index.
Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.
This material is provided for informational purposes only and should not be used or construed as a recommendation for any security.
In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.
This material may not be reproduced or redistributed without the express written permission of Strategic Advisers LLC.
Fidelity® Wealth Services provides non-discretionary financial planning and discretionary investment management through one or more Personalized Portfolios accounts for a fee. Advisory services offered by Strategic Advisers LLC (Strategic Advisers), a registered investment adviser. Brokerage services provided by Fidelity Brokerage Services LLC (FBS), and custodial and related services provided by National Financial Services LLC (NFS), each a member NYSE and SIPC. Strategic Advisers, FBS, and NFS are Fidelity Investments companies.
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