In This Market, the Appeal of 'Go Anywhere' Funds
These funds give portfolio managers considerable leeway in choosing among different asset classes
When global markets got rough again this past summer, many investors found themselves wondering helplessly where shelter might lie. U.S. stocks were gyrating wildly up and down every day. International equities were taking a pounding. And the yield on 10-year U.S. treasury notes sank below 2 percent.
With options like those, it's no wonder investors have been turning to "go anywhere" and "world allocation" funds, which give portfolio managers considerable leeway in choosing different asset classes and in some cases give them carte blanche to trade in and out of anything they please.
According to the research firm
Financial advisers warn that these funds are no slam-dunk solution.
For one thing, it's hard to know what you're buying. World allocation funds range from conservative portfolios that hold a steady split between global stocks and bonds to "tactical" funds that can make bold swings into international stocks, precious metals, and real estate to goose their returns.
It's tough to compare a fund's performance to an appropriate benchmark.
Yet another reason to be cautious:
Many of the funds in this category charge loads, or sales fees, says
For a fund that truly goes anywhere, Herbst and
In fact, advisers say the quality of the management team is the most important thing to look for. If managers who only have to be expert in one asset class have a hard time outdoing the market, you shouldn't expect the people running these far more complex funds to be any smarter, warns
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