Dedicated Portfolio
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.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.