MONEY
Get Somewhere With ‘Go Anywhere’ Funds
Global allocation funds provide the unique flexibility to move around different asset classes. ::
BY DAN WEIL S
o-called “go-anywhere” funds, which can invest in any asset, anywhere, anytime, have multiplied quickly in recent years, and experts say
they can be quite useful for investors. “We have used them for a long time, since our inception
in 1994,” says James Holtzman, a wealth manager for Legend Financial Advisors in Pittsburgh. “They’re more important for long-term cycles because they shield you from downturns, but give you some upside,” he says. Go-anywhere funds are often synonymous with
global allocation funds, which Morningstar research firm defines as “portfolios [that] seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash.” Morningstar identifies more than a hundred funds in this category. Holtzman likes the idea of a fund that rotates among different asset classes, giving a manager maximum flexibility to seize market opportunities.
HOLTZMAN
“Maybe they will have a heavy weighting of gold at some point or other metals or agricultural commodities. They may sit in cash at times looking for different opportunities,” he says.
REBALANCING SPEED IS KEY Michael Herbst, director of active funds research
at Morningstar, divides world allocation funds into two smaller categories: ones that move more slowly to rebalance their assets and ones that move quickly, which he calls tactical funds. The slower-moving funds might be attractive as a long-term core holding, Herbst says. The tactical funds are more appropriate for someone looking to take more risk in search of higher returns. One such example, Ivy Asset Strategy Fund (Ticker:
WASAX), is an aggressive fund Herbst likes, as long as clients realize it can be a wild ride. “If you’re holding a tactical fund you should expect allocations to change and be comfortable with that,”
78 NEWSMAX MAXLIFE | MARCH 2015
Herbst says. “Be ready to ride out volatility or bad performance.” A less bumpy alternative is BlackRock Global Allocation Fund (MDLOX). Historically, changes in the fund’s asset allocation have come gradually. “This would make sense as a core holding,” Herbst says. “Management’s goal is to deliver stock market-like return with less volatility, and they take that less volatility part very seriously. They realize people will use this for capital preservation and appreciation over the long term.” Pimco All Asset All Authority Fund (PAUAX) is more
tactical. The goal is to beat inflation, as measured by the consumer price index, by 6.5 percentage points annually over a market cycle. “That absolute return goal means the asset allocation
will change more quickly than BlackRock Global Allocation,” Herbst says. “But for someone looking for a core fund that will beat inflation, this is one that you may want to consider.”
PHOTO COMPOSITE: HOT AIR BALLOON/CAROL AND MIKE WERNER/GETTY IMAGES / CLOUDS/ISTOCKPHOTO HOLTZMAN/COURTESY OF LEGEND FINANCIAL ADVISORS, INC.
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