Sensenig employs mostly bond mutual funds that have a diversified mix of Treasury and so-called agency bonds, such as Fannie Mae and Freddie Mac.
"We use global bond funds rather than solely domestic," Brenn says, "but we make sure that the foreign bond component has a built-in currency hedge so as not to increase the overall volatility."
This exposure is gained through Dimensional Funds Advisers products, mainly the DFA Two-Year Global Fixed Income Portfolio (DFGFX) and DFA Five-Year Global Fixed Income Portfolio (DFGBX).
The bond side of a typical model portfolio at Sensenig will have "high credit quality and maturities short, so that our clients don't have too much exposure to risk on the bond side. Our models do use TIPS [Treasury inflation-protected securities], but in very small amounts, since these types of bond funds usually have a fairly long duration and corresponding higher level of risk."
For high-tax-bracket clients, Sensenig holds municipal-bond funds because the difference between the pretax and after-tax return "is much larger than someone with a lower marginal tax rate. We tend to gain exposure in this area by using low-cost Vanguard muni funds like Vanguard Short-Term Tax Exempt Fund [VWSUX] and Vanguard Limited-Term Tax-Exempt Fund [VMLUX]."
A knowing gift
Give your elders (and your adult children, too) the information to help sort out their financial details. The National Association of Area Agencies on Aging has a great website ( www.n4a.org) offering an Eldercare Locator for agencies and resources in your city and state. Click on "Programs" for details.
On AARP's website, there's also a good planning guide on how to discuss financial matters tied to aging loved ones. Here's the link: http://goo.gl/9eMtmD.