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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated September 30, 2020

What is a Dedicated Portfolio?

A dedicated portfolio is a passively managed portfolio whose cash flows are designed to match the cash flows needed to fulfill a future obligation.

How Does a Dedicated Portfolio Work?

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

For example, a company with pension obligations that will begin in 10 years may set up a dedicated portfolio that has the twin goals of a) being worth X dollars in 10 years, and b) will generate Y dollars in annual cash flow to match the cash flow needed to fulfill the pension obligations.

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

Why Does a Dedicated Portfolio Matter?

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

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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Dedicated Portfolio, then please ask Paul.

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