Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Structured Portfolio

What it is:

A structured portfolio is a type of passively managed portfolio whose cash inflows are designed to meet the cash outflow requirements to fulfill a future obligation.

How it works (Example):

A structured portfolio is also referred to as a dedicated portfolio.

For example, a company with pension obligations that will begin in 5 years may set up a structured portfolio that has the two goals of a) being worth X dollars in 5 years, and b) will generate Y dollars in annual cash flow to match the cash flow needed to fulfill the pension obligations.

A structured portfolio is generally made up of investment grade securities (typically bonds) that have very low risk of default. Because of the portfolio's low risk and use of investment grade securities, a structured portfolio will rarely need to be rebalanced (i.e. it can be passively managed).

Why it Matters:

Structured portfolios are important and most useful for investors who require a reliable source of income for the future (such as retirement). Because the goal of a structured portfolio is to produce stable cash flows, it should be mainly invested in investment grade bonds and other income-producing assets with extremely low volatility.

[InvestingAnswers Feature: Retirement Solutions: Avoid the 11 Pitfalls that will Destroy Your Nest Egg]

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...