A Balanced Batch of New Allocation Fund Ratings
Balanced funds come in all shapes and sizes.
What's in a name? Not always much when it comes to balanced funds, which can come in an array of flavors despite having similar names. Here's a roundup of recently rated "balanced" funds that fall in the category of funds that generally have between 50% to 70% of their portfolios invested in equities. While their equity allocations may put them in the same peer group, their wide range of approaches can lead to very different performance patterns and results.
It's no coincidence that the two funds that operate within narrower tactical guideposts-- Columbia Balanced (CBLAX) and John Hancock Balanced (SVBAX)--are the ones in this group recommended by Morningstar Analysts. Tactical asset-allocation decisions are notoriously difficult to consistently get right. Because they're often dependent on making just a few key correct calls, getting the timing wrong on one decision can easily wipe out gains from a previous move. Managers operating within narrower tactical bands (if they use tactical management at all) are less susceptible to allocation mistakes. Instead, these two funds rely more heavily on the results of underlying strategies, many of which have proven records of outperformance.
Janet Yang, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.