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Mixed World-Allocation Portfolio Garners a Bronze

Greg Carlson

Greg Carlson: Franklin Mutual Quest is a world-allocation fund that earns a Bronze Morningstar Analyst Rating due to its deep experienced team, proven process, and below-average fees. The portfolio managers of this fund work as a part of a team of couple of dozen people. They invest in a mix of undervalued equities, distressed debt, and a smattering of merger-arbitrage plays. This fund invests 55% to 75% of its assets in equities typically, but the managers have a lot of flexibility to vary that weighting depending on where they are finding value. They might find the bonds of a company to be more attractive than its equity. The bond side of the portfolio is typically filled with distressed companies that are in some kind of financial trouble where their bonds are trading very cheaply, as cheaply as $0.50 on the $1. This provides a margin of safety for them in case things turn out wrong. Over time, the fund's below-average fees, strong team, and proven process makes this an interesting world-allocation holding.