Morningstar Analyst Rating
Funds in this category typically have the latitude to invest in stocks and bonds across the globe and pursue a broad range of strategies. Some are opportunistic and aggressive, while others emphasize preserving capital and delivering positive absolute returns in a variety of market environments. That’s a big difference, so it’s crucial that would-be go-anywhere investors do their homework. Obviously, identifying management acumen and soundness of strategy are critical elements to picking a good fund here. That’s where Morningstar’s Analyst Ratings can help. For this screen, we looked for open world-allocation funds that earn Gold, Silver, or Bronze ratings, which means we have confidence in the fund’s ability to execute effectively over the long run. There are currently no no-load world-allocation funds that earn Medalist ratings, but some investors may have access through a company retirement plan to the funds listed below without paying a load. Other investors may want to peek at the portfolios of these top-rated managers as they seek out their own opportunities.
World Allocation Funds
World-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. While these portfolios do explore the whole world, most of them focus on the U.S., Canada, Japan, and the larger markets in Europe. It is rare for such portfolios to invest more than 10% of their assets in emerging markets. These portfolios typically have at least 10% of assets in bonds, less than 70% of assets in stocks, and at least 40% of assets in non-U.S. stocks or bonds.
The Analyst Rating for Funds is based on our fund analysts’ conviction in a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.
Distinct Portfolios Only
Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. Screening for “distinct portfolios only” removes all but one of these options to avoid having several share classes of the same offering cluttering the list. Morningstar normally designates the oldest share class as the distinct portfolio. In some cases, this share class may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. In those cases, investors may want to consider an “investor” share class of the same fund, though the fund expenses may be higher for those share classes.