Balanced Funds

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Sep 4, 2008 12:56 am

Has anyone else been holding balanced funds like your typical 60/40 or even the more aggressive 80/20 and been utterly disgusted with their performance?


I hold some Russell Funds and AllianceBernstein and they're definitely not living up to what they are "supposed" to be doing.
 
They claim betas of .60-.70 but have been just as bad or worse than the S&P, which is significantly worse than the balanced index.  No wonder some of my accounts have been underperforming...these "core" holdings of balanced funds have been eating major shit.  What's going on?
 
On another note, it appears many active managers were keeping pace with their benchmarks, then when the market turned up a little in mid-July due to financials, they have gone in the completely opposite direction to this day...down.  It's just painful.
Sep 4, 2008 6:47 am

I would imagine Ice is going to chime in on this one - you lobbed him an easy pitch!

Sep 4, 2008 8:39 am

Snaggs - balanced funds are a safe way to lose money.  You're probably somewhat new to this industry - but I would recommend that you create your own balanced portfolio using equities, or equity mutual funds - along with a level of fixed income products to stabalize the market volitility.  Just a thought.

 
Good luck on this new career - it looks like you're learning some tough lessons.
 
Sep 4, 2008 8:59 am

One of the fundamental problem with some "balanced" funds (and I use that term loosely) is that many of them have been heavily concentrated in financials.  The theory has gone that they have larger yields and lower volatility.  Unfortunately, that theory does not factor in what we have been going through the past 12 months.  I prefer to use "Global Allocation" funds.  I like Capital Income Builder and First Eagle Global.

 
And fyi, normally I use them as core holdings with satellites, or as a single fund for a small amount of money (starting a 529, an IRA, etc.).