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Fund Times

World-Allocation Fund Category Heating Up

Plus, Fairholme ups its AIG stake, and more

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The world-allocation category is a new thing--at least for some fund companies. More than 20 world-allocation funds have been launched so far in 2010, while only 32 of these offerings launched in 2008 and 2009 combined.

It's no mystery why fund companies are eager to launch new world-allocation funds. The category has had large, positive inflows every year since 2001. In the year to date through September, the category has gained $8.5 billion in new investor assets. Meanwhile, many domestic-equity categories have experienced outflows of $5 billion or more of investor assets so far this year. The strong inflows in the category may be partly a case of performance-chasing. The category's 5.31% annualized five-year performance leads all other balanced categories.

Courtney Goethals Dobrow does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.