TIPS to Short Duration Bonds

After careful consideration, we have decided to make a small change to our core portfolios. We wanted to notify you of this change that will prompt you to see some activity via confirmations and in your monthly statements. This change will replace your Inflation Protected Bond fund (DIPSX) with the Short Duration Real Return Portfolio fund (DFAIX). The Inflation Protected Bond fund has been in your portfolio to provide protection in an inflationary environment. While interest rates have risen slightly through 2013, the long duration of this portfolio has lead to capital losses in the position. With interest rates once again receding in 2014 we have regained much, if not all of the losses depending on your particular holding time and we felt this was the best time to make a change. We are able to do so as a result of Dimensional Fund Advisors recent work in this area enabling us to continue to have a position that protects against inflation while shortening the duration of the portfolio in able to provide greater insulation in a rising interest rate environment.   If you have any questions, please don’t hesitate to contact us here in the office at (805)962-7725. Sincerely, Rich Schuette and the Avalan team Dru, Tamara, Heather and Melani