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I have been searching for a global balanced fund to be the single investment for our house. Not because messing around with funds isn’t a great sport but I might depart the scene or lose my mind. I have two candidates, one overweights financial services and the other tech. What would you go with? My final criteria is lower drawdown as opposed to max gains. Thanks for your thoughts.
Dunno if this one meets your criteria. It's a State Street ETF, a fund of its own funds, includes bonds. So, Asset Allocation or what we used to call "Balanced." Ticker is GAL.
Schwab is not showing me what I want to see about it. Overweight Financials or Tech, you ask? That's a false choice, a forced bifurcation.
Morningstar shows 15.93% in Financials, 26.42% in Tech, in GAL. Me? Just for shits and giggles:
I'm currently 26% in Financials, and 25.1% in "Info. Tech" according to Schwab. Those are my 2 biggest sector bets, followed by Health Care (13.1%) and Energy (12.8%). I'm waiting for the A.I. bubble to burst. My fearless prediction. So, I stay 47% in bonds: 19% "core." 28% Junk.
@ Crash. Thanks. Picking the “one” is very difficult. It’s easy to find three things wrong with any balanced fund. Too much tech, or junk or financials or derivatives, or too little global stocks. You get the idea.
@ Hank. It’s gotta be someplace. Seriously,,, what’s riskier in the next five years, tech or financials? I don’t have FOMO and won’t regret leaving money on the table.
For the search words: best fund with mix of tech and financial services
A quasi AI answer. Two sections. This first below doesn't include the word 'global', the second section does.
Regards, Catch
--- Funds that provide exposure to both technology and financial services generally fall under the Fintech (Financial Technology) thematic category. These funds invest in companies leveraging technology to transform financial services like payments, banking, and investing.
Here are some of the best-known and top-performing Fintech ETFs:
Top Fintech Funds Fund Name Ticker Description ARK Fintech Innovation ETF ARKF An actively managed ETF that invests in companies at the forefront of innovation in the fintech space, with holdings like Block, PayPal, and Coinbase. It is known for its focus on disruptive innovation and has shown strong returns over a three-year period despite high volatility.
Global X FinTech ETF FINX This fund seeks to invest in companies using technology to help banks and other financial firms digitize their operations. It offers broad exposure to companies involved in payment processing, peer-to-peer lending, and digital banking globally.
Amplify Digital Payments ETF IPAY A "pure-play" on the digital and mobile payments industry, this ETF includes traditional credit card companies like Visa and Mastercard, as well as emerging consumer payment companies like PayPal and Block.
iShares FinTech Active ETF BPAY This actively managed fund invests in a range of innovative companies, including payment processors and traditional financial institutions adopting new technologies.
Capital Link Global Fintech Leaders ETF KOIN This fund invests in a mix of traditional tech companies (e.g., Microsoft, Oracle) that provide the underlying technology for financial firms, and companies that use fintech internally.
Key Considerations Thematic Focus: These funds are thematic and thus more concentrated than broad market or even single-sector funds. They are designed to capture growth in the intersection of two dynamic sectors. Risk Profile: Fintech funds can be volatile due to the nature of technology and the evolving regulatory landscape of the financial sector. The performance has been mixed across different funds and time periods. Active vs. Passive: Some, like ARKF and BPAY, are actively managed, relying on management expertise to pick stocks. Others like FINX are index funds, aiming to track a specific index. Before investing, consider your risk tolerance and investment objectives, and review the specific holdings and expense ratios of each fund
--- USING THE WORD 'GLOBAL' Finding a single "best" fund is difficult as performance and suitability depend on market conditions and individual risk tolerance. However, several global funds invest significantly in both technology and financial services, offering exposure to both sectors. Funds with a mix of Technology and Financial Services Funds that explicitly target a blend of technology and financial services are often called "fintech" funds. These funds focus on the intersection of the two sectors.
ARK Fintech Innovation ETF (ARKF): This active ETF invests in companies that focus on disruptive innovation in the financial services sector, which inherently includes a large technology component. It has shown strong long-term performance (50.09% three-year total return) but comes with high volatility.
Global X FinTech ETF (FINX): This ETF offers exposure to companies providing financial technology products and services.
Capital Link Global Fintech Leaders ETF (KOIN): This fund divides its investments into two groups: traditional financial companies adopting new technology and technology firms providing the code/hardware for fintech systems. Its top holdings include a mix of large tech companies like Microsoft and financial service infrastructure providers.
General Global Technology Funds with Diversification Many general global technology funds include financial technology companies as part of their diversified technology holdings. These often have strong long-term performance and high ratings. Janus Henderson Global Technology And Innovation Fund (JNGTX, JGLTX): This highly-rated fund invests in domestic and foreign companies that benefit from technological advances. It has strong three-year annualized returns (32.4%) and is a good option for global technology exposure.
T. Rowe Price Global Technology Fund (PRGTX): This fund seeks long-term capital growth by investing globally in technology companies. It has a reasonable expense ratio and good performance.
Putnam Global Technology Fund (PGTAX): Another global fund focused on capital appreciation through investments in large and mid-size companies in the technology sector.
Important Considerations Global vs. US Focus: Most top-performing, large-asset tech funds are heavily US-focused (e.g., Vanguard Information Technology ETF, FTEC, XLK), often with over 60% of assets in the top few large-cap tech stocks like Apple, Nvidia, and Microsoft. Funds with a true "global" mandate will have more exposure to international markets. Risk: Sector-specific funds, especially in high-growth areas like technology and fintech, can be more volatile than a broadly diversified global index fund. Expense Ratios: ETFs generally have lower expense ratios than actively managed mutual funds, which can impact long-term returns. It is recommended to evaluate the specific holdings, risk profiles, and expense ratios of these funds to determine which best fits your investment goals.
@ Hank. It’s gotta be someplace. Seriously,,, what’s riskier in the next five years, tech or financials? I don’t have FOMO and won’t regret leaving money on the table.
I wish I could answer your question Larry. I’ve been spending too much time reading 1929 lately, which may explain an aversion to putting much risk on the table. I believe there will be better buying opportunities. But, it all depends on risk appetite and time horizon.
Here’s the problem with the two choices: Even if one or the other (tech / financial) is “safer” - that does not preclude that “safer” investment from underperforming for months or even years before the tide turns. Gail Dudack wanted nothing to do with tech for a couple years before the 2000 tech wreck. But tech continued to soar. Became so “out of sync” with the current climate that Rukeyser finally fired her (from her exalted position as a Wall Street Week “elf”). .
S&P500 has over 31% exposure to technology sector and that is quite enough in my opinion. In light of the high valuation of the US market, future returns are likely to be lower than the historical averages.
For simplicity of using a single fund, why not consider broad-base total market index funds with both US and international in stocks and bonds? Depending which brokerage you use, one can select a static asset allocation funds or even a target date funds. At Vanguard they offer the LifeStrategy funds with 80/20 (Growth), 60/40 (moderate growth), 40/60 (conservative growth) and 20/80 (Income). Similar allocation funds are available at Fidelity and Schwab too.
"I have been searching for a global balanced fund to be the single investment for our house."
If I was searching for a global balanced fund, I would probably select Vanguard Global Wellington. It has low expenses, a well-resourced adviser (Wellington), and a proven strategy.
Thanks for adding the substance guys. ISTM that “global” funds, unlike international, do normally have significant U.S. exposure. Some as high as 65-70%. Not to argue, just to be sure we’re on the same playing field.
The whole concept of a single fund for all (or most) of one’s investments is a tough nut to crack. I wouldn’t do it, but you can find many examples of where it would have produced great long term results. Too many fantastic funds to even mention. But always that nasty little warning in the fine print: “Past performance is no guarantee …”
At 80 and 15 years out from the last serious bear market (‘07-‘09) … do I want 60-65% of my life savings in stocks? No thank you. There are lot of interesting issues here. I look forward to following the thread. -
Fair play / disclosure here: I am about 30% equity, 10% “other” (mostly real assets) with the remaining 60% in short term or rate-hedged debt of varying quality. Compared to 1-2% on cash a decade ago, 4, 5 or 6% (depending on quality of instrument ) isn’t hard to take. If leary of equity valuations, you’re getting paid to wait.
@larryB At my stage of investing, risk=volatility. Obviously, nobody can see the future but if you look at a chart of the 2 sectors over the past 5 years, you may have your answer. Are you willing to bet that the next 5 years will be much different? While gains have been greater in tech, chances of a loss were also greater.
Perhaps you could share the names of the 2 funds you are considering.
@larryB, have you run those 2 candidates through MFO Premium for their drawdown? The other question you have to ask yourself is will I have enough time to recover in severe drawdown.
Our MFO contributor, Lynn Bolin, has written extensively on conservative portfolio in retirement. Highly recommended.
The two funds we own are VGWIX, Global Wellesley and PRSIX , the TRP conservative allocation. I use Portfolio Visualizer to get max drawdown, worst year and asset allocations. Lastly I supplement the two balanced funds with some short duration FI to bring the whole thing down to 30% equity and lower the duration. This is all alongside my long time Permanent Portfolio position. And there you have it. My six fund solution. LOL.
One of my “go to” sites is Yahoo. PRSIX is an excellent fund. It only lost 20.38% in 2008 and gained nearly all of that back with a 25+% gain the following year. A bit over half the ‘08 loss occurred in the final quarter of ‘08 when it lost nearly 11%. Got hit hard in ‘22 with a 13.56% loss - but what didn’t?
Doing the math … assuming someone held PRSIX thu both 2008 and 2009 they’d have emerged after 2 years with 99.9% of their initial investment (a larger gain needed to break even).
@larryB, well done with your choices and asset allocation. These are fine choices serving as conservative actively managed global allocation funds. Neither funds mentioned here are overweighed in technology, although Wellington tends to favor financial sector a bit more.
I would avoid tech heavy funds now since tech is so high about historical valuations. Granted someone will make a lot of money ( maybe) on AI but who knows who?
I tend to shy away from index funds, even "moderate allocations" lifestyle funds as they have to buy even overvalued sectors, unless you pick an equal weight, not market cap weighted. I have not looked to see if any of the "lifestyle" funds use something other than market cap weighting.
If you pay an active management fee, I think you want active management and a fund with high "Active share". To me that means well thought out strategy based on something other than " I'll buy what the other guys are buying".
While it is great to ride up with a boutique manager like AVALX these kind of funds need regular attention.
Sticking with a big firm ( Fidelity, Vanguard, State Street, American Funds) and a Big fund is a good idea because even with manager turnover, there will be some consistency
You need to know what your level of risk is and income needs are too.
Thank you, @Sven. I am putting the finishing touches on an article about portfolio performance during the past hundred years of bear markets, and a second article about portfolio performance including the financial crisis to date. It was informative to me.
With these high market valuations, I like Vanguard Global Wellesley, but Global Wellington is also great. I bought Columbia Thermostat today, but it is not globally diversified.
@lynnbolin2021. Re Global Wellesley Vs Global Wellington. The allocation to tech and finance are so dramatically different between the two. Really different funds not to mention the significant equity allocation difference. But both managed by Wellington.
@larryB, thank you. I see that. I will be evaluating buying one or the other next week. I like the safety of Wellesley, but Wellington is only 15% in technology.
@sma3. All good points. The life strategy series and the AOK, AOM and AOR ETF’s are essentially built from index bits and pieces. And if it matters the bond portfolio of Vanguard Life Strategy Conservative growth is about 30% securitized and derivatives paper. Works fine until it might not.
I know of them but little else? Have you used them?
There are a few little odd things. For example AOM although 60/40 is 27% tech, although SP500 ( 35% tech) is only 23% of the portfolio.
Can anyone make sense of M* other methods of listing Asset allocation such as "economic exposure
"The Economic Exposure View displays the sensitivity of portfolio return to various asset classes. Economic Exposure will model the impact of these instruments based on their inherent leverage rather than solely based on their market values. Compared to the Classic Asset Allocation, this view provides additional clarity to investors around how funds use derivatives to adjust the portfolio’s risk profile in addition to more clearly depicting sources of risk and return."
I check the asset allocations on Portfolio Visualizer. It’s great for the equity side but not as handy for the fixed income. But M* breaks down the unknown parts for F.I. I think that the financial sector has lots of potential problems waiting to surface. So plain old fashioned government and corporate bonds are at least more transparent. Then you have the question of what quality is BBB nowadays.
...Then you have the question of what quality is BBB nowadays.
This is merely anecdotal, but what I hear over and over is that even below BBB-rated Junk these days is generally of better quality than it once was, particularly leading up to the GFC in '08 or so. My source = listening to BBG's "Real Yield."
...Then you have the question of what quality is BBB nowadays.
This is merely anecdotal, but what I hear over and over is that even below BBB-rated Junk these days is generally of better quality than it once was, particularly leading up to the GFC in '08 or so. My source = listening to BBG's "Real Yield."
I've read and heard similar claims for BBB bonds. Multiple sources — which I don't currently recall — stated that the overall quality for BBB bonds in 2025 is higher than it was during certain prior periods. I don't know whether or not this is actually true.
----- Over the past five years, the quality of BBB bonds has seen mixed signals: yields have decreased overall, but their risk profile has been a subject of debate. Some sources suggest that while yields have declined from historical highs, the underlying corporate fundamentals of many BBB-rated companies are stronger, with a notable increase in the overall market share of BBB bonds, often attributed to a shift from higher-rated bonds and an abundance of issuance in shorter-term maturities. However, the increasing popularity of this market segment raises concerns about the potential for a future downgrade, especially as market conditions fluctuate.
Yields and returns Decreased yields: The effective yield for US corporate BBB bonds has fallen over the last five years, though it remains above the long-term average, according to data from YCharts.
Mixed returns: ETFs tracking BBB-rated corporate bonds have shown a range of returns over the last five years, depending on the specific fund's focus, such as maturity or duration. For example, the Bondbloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS) had a 5-year return of 2.49% while the iShares BBB Rated Corporate Bond ETF (LQDB) has a 5-year return of 0.00% as of a recent reporting date, highlighting the impact of bond-specific factors, such as maturity, on performance.
Higher income: Despite lower yields, some analyses suggest that BBB-rated corporate bonds have historically provided higher average coupon income compared to other investment-grade bonds.
Quality and risk Increasing market share: The overall market share of BBB-rated debt has increased, as a larger number of companies issue more debt within this rating bracket, potentially making it a more accessible and liquid investment class.
Mixed fundamentals: Some analysis suggests that the quality of BBB-rated companies has improved, with many former A-rated companies maintaining strong cash flows despite their lower credit rating.
Contingent risk: The shift in the market toward BBB-rated bonds has sparked concerns among some analysts about potential downgrades in the future, particularly if market conditions were to worsen.
Focus on specific segments: Some sources recommend focusing on shorter-dated BBB-rated bonds while avoiding the long end of the maturity curve to limit downside risk, especially in more leveraged sectors.
Low default rates: Despite concerns about potential downgrades, BBB bonds still have historically low default rates, typically below 0.36%.
Key takeaway
Increased market share: Over the past five years, BBB-rated bonds have become a more prominent part of the investment landscape, driven by factors like increased issuance and a shift toward shorter-dated maturities. Divergent performance: Performance has been mixed, with some ETFs showing positive returns while others have been flat or even negative, underscoring the importance of evaluating individual bonds or fund holdings based on their specific characteristics. Mixed quality concerns: While some BBB-rated companies are considered fundamentally sound, the increased market share has raised concerns about potential future downgrades and market volatility. Need for careful selection: Investors should conduct thorough due diligence before investing in this asset class to identify the highest-quality issuers and mitigate risks.
@catch22 Thank you, very much worth reading. I'm still reaching for yield in Junk funds, which of course are BELOW BBB rated. I also see, as can anyone else, that the spread between gummint or AAA rated bonds and Junk is thin, currently. Many of the talking heads recommend eschewing the risk, and investing in higher quality paper. I have heavily weighted one Fund over another in my portfolio, and both are offering 7% or higher. It makes sense for me to think in terms of comparing funds vs. funds. The amount required to buy into corporates as an individual investor is prohibitive, unless I'm actually all wet about that (?) PRCPX. TUHYX.
Compare the well-known FALN (Fallen Angels) Junk fund: 6.36% current yield. I have owned it in the past.
Carl Kaufman of Osterweis Strategic Income, OSTIX, is more cautious on BBB rated bonds. The fund holds over 10% in cash, a historical high. Excerpt from 4th quarter outlook:
For fixed income investors, the AI-themed names are a cohort that exists largely outside our investment purview (although we did have one very successful investment in an AI-related convertible, which we exited at the end of 2024). Most of the AI-themed names are private, VC-owned cash burners that are not prime candidates for borrowing in the credit markets. The few that have come to market to borrow have very dubious credit profiles and have asked lenders to invest largely based on their future prospects. This is a sensible arrangement for equity holders, who receive unlimited upside in exchange for the risk they take, but for bondholders it is far less appealing, as their upside is limited to the coupon they receive while the risk is the same. We are, however, carefully monitoring this because we believe it is an apt barometer for broad investor sentiment, which is unabashedly risk-on.
The hyperscalers are budgeting hundreds of billions of dollars of CapEx to build data centers, which they hope will power a massive expansion of AI adoption in the years ahead. The numbers are astonishing, and the hype and activity around AI reminds us of the excitement around all things dot-com and dark fiber in the 1990s. The birth of the internet was a society-changing phenomenon, and AI could prove to be the same. However, it is unlikely that AI adoption will pan out exactly as planned. Given the lofty valuations ascribed to these early-stage, unproven companies, any deviation from the expected adoption rate and the ensuing revenue forecasts (many of which are still years away) could trigger at least a tremor, and possibly a much larger quake as winners and losers are parsed by the market. Stay tuned.
OSTIX has lower drawdowns than typical junk bond funds. He tends to stay in higher quality end of junk bonds that provides more consistent total return.
With respect to Global Wellington and Global Wellesley funds, they share the same bond manager, Loren Moran. Moran tends to hold higher % of long bond for higher yield. This hurt them when the FED hiked rate in 2022. Now the FED is reversing the rate cycle that benefit the long bonds. Something to bear in mind of Wellington funds. On the equity side, they share the same manager but the goals are slightly different that reflect in the selector selection. Global Wellington focuses more on the capital appreciation side while Global Wellesley focus on dividend and value oriented stocks. I own Global Wellington but will buy Wellesley.
@sma3, agree with point on the Active Shares. The passive asset allocation funds are often used as benchmark to other asset allocation funds. I still prefer active management.
Were I to start from scratch or advise a new investor on the original question, I would go with CGBL, the Capital Group’s fairly new global balanced ETF. I think the fund has adequate exposure to growth sectors and sensible FI exposure. I’m impressed with the team approach and the long-term records of American Funds to be comfortable with a new vehicle. Whether or not there’s enough tech or financial, that’s the managers’ job and they are a lot smarter than most individual investors.
Comments
Schwab is not showing me what I want to see about it. Overweight Financials or Tech, you ask? That's a false choice, a forced bifurcation.
Morningstar shows 15.93% in Financials, 26.42% in Tech, in GAL.
Me? Just for shits and giggles:
I'm currently 26% in Financials, and 25.1% in "Info. Tech" according to Schwab. Those are my 2 biggest sector bets, followed by Health Care (13.1%) and Energy (12.8%). I'm waiting for the A.I. bubble to burst. My fearless prediction. So, I stay 47% in bonds: 19% "core." 28% Junk.
My own Financials are NOT in the Big Bankster outfits that are the famous U.S. entities.
***********
Break a leg!
https://www.morningstar.com/etfs/arcx/gal/quote
Well, if you’re considering dumping 100% of your money into a 60/40 fund …
Might be too late.
For the search words: best fund with mix of tech and financial services
A quasi AI answer. Two sections. This first below doesn't include the word 'global', the second section does.
Regards,
Catch
--- Funds that provide exposure to both technology and financial services generally fall under the Fintech (Financial Technology) thematic category. These funds invest in companies leveraging technology to transform financial services like payments, banking, and investing.
Here are some of the best-known and top-performing Fintech ETFs:
Top Fintech Funds
Fund Name Ticker Description
ARK Fintech Innovation ETF ARKF An actively managed ETF that invests in companies at the forefront of innovation in the fintech space, with holdings like Block, PayPal, and Coinbase. It is known for its focus on disruptive innovation and has shown strong returns over a three-year period despite high volatility.
Global X FinTech ETF FINX This fund seeks to invest in companies using technology to help banks and other financial firms digitize their operations. It offers broad exposure to companies involved in payment processing, peer-to-peer lending, and digital banking globally.
Amplify Digital Payments ETF IPAY A "pure-play" on the digital and mobile payments industry, this ETF includes traditional credit card companies like Visa and Mastercard, as well as emerging consumer payment companies like PayPal and Block.
iShares FinTech Active ETF BPAY This actively managed fund invests in a range of innovative companies, including payment processors and traditional financial institutions adopting new technologies.
Capital Link Global Fintech Leaders ETF KOIN This fund invests in a mix of traditional tech companies (e.g., Microsoft, Oracle) that provide the underlying technology for financial firms, and companies that use fintech internally.
Key Considerations
Thematic Focus: These funds are thematic and thus more concentrated than broad market or even single-sector funds. They are designed to capture growth in the intersection of two dynamic sectors.
Risk Profile: Fintech funds can be volatile due to the nature of technology and the evolving regulatory landscape of the financial sector. The performance has been mixed across different funds and time periods.
Active vs. Passive: Some, like ARKF and BPAY, are actively managed, relying on management expertise to pick stocks. Others like FINX are index funds, aiming to track a specific index.
Before investing, consider your risk tolerance and investment objectives, and review the specific holdings and expense ratios of each fund
--- USING THE WORD 'GLOBAL'
Finding a single "best" fund is difficult as performance and suitability depend on market conditions and individual risk tolerance. However, several global funds invest significantly in both technology and financial services, offering exposure to both sectors.
Funds with a mix of Technology and Financial Services
Funds that explicitly target a blend of technology and financial services are often called "fintech" funds. These funds focus on the intersection of the two sectors.
ARK Fintech Innovation ETF (ARKF): This active ETF invests in companies that focus on disruptive innovation in the financial services sector, which inherently includes a large technology component. It has shown strong long-term performance (50.09% three-year total return) but comes with high volatility.
Global X FinTech ETF (FINX): This ETF offers exposure to companies providing financial technology products and services.
Capital Link Global Fintech Leaders ETF (KOIN): This fund divides its investments into two groups: traditional financial companies adopting new technology and technology firms providing the code/hardware for fintech systems. Its top holdings include a mix of large tech companies like Microsoft and financial service infrastructure providers.
General Global Technology Funds with Diversification
Many general global technology funds include financial technology companies as part of their diversified technology holdings. These often have strong long-term performance and high ratings.
Janus Henderson Global Technology And Innovation Fund (JNGTX, JGLTX): This highly-rated fund invests in domestic and foreign companies that benefit from technological advances. It has strong three-year annualized returns (32.4%) and is a good option for global technology exposure.
T. Rowe Price Global Technology Fund (PRGTX): This fund seeks long-term capital growth by investing globally in technology companies. It has a reasonable expense ratio and good performance.
Putnam Global Technology Fund (PGTAX): Another global fund focused on capital appreciation through investments in large and mid-size companies in the technology sector.
Important Considerations
Global vs. US Focus: Most top-performing, large-asset tech funds are heavily US-focused (e.g., Vanguard Information Technology ETF, FTEC, XLK), often with over 60% of assets in the top few large-cap tech stocks like Apple, Nvidia, and Microsoft. Funds with a true "global" mandate will have more exposure to international markets.
Risk: Sector-specific funds, especially in high-growth areas like technology and fintech, can be more volatile than a broadly diversified global index fund.
Expense Ratios: ETFs generally have lower expense ratios than actively managed mutual funds, which can impact long-term returns.
It is recommended to evaluate the specific holdings, risk profiles, and expense ratios of these funds to determine which best fits your investment goals.
Here’s the problem with the two choices: Even if one or the other (tech / financial) is “safer” - that does not preclude that “safer” investment from underperforming for months or even years before the tide turns. Gail Dudack wanted nothing to do with tech for a couple years before the 2000 tech wreck. But tech continued to soar. Became so “out of sync” with the current climate that Rukeyser finally fired her (from her exalted position as a Wall Street Week “elf”). .
For simplicity of using a single fund, why not consider broad-base total market index funds with both US and international in stocks and bonds? Depending which brokerage you use, one can select a static asset allocation funds or even a target date funds. At Vanguard they offer the LifeStrategy funds with 80/20 (Growth), 60/40 (moderate growth), 40/60 (conservative growth) and 20/80 (Income). Similar allocation funds are available at Fidelity and Schwab too.
If I was searching for a global balanced fund, I would probably select Vanguard Global Wellington.
It has low expenses, a well-resourced adviser (Wellington), and a proven strategy.
The whole concept of a single fund for all (or most) of one’s investments is a tough nut to crack. I wouldn’t do it, but you can find many examples of where it would have produced great long term results. Too many fantastic funds to even mention. But always that nasty little warning in the fine print: “Past performance is no guarantee …”
At 80 and 15 years out from the last serious bear market (‘07-‘09) … do I want 60-65% of my life savings in stocks? No thank you. There are lot of interesting issues here. I look forward to following the thread.
-
Fair play / disclosure here: I am about 30% equity, 10% “other” (mostly real assets) with the remaining 60% in short term or rate-hedged debt of varying quality. Compared to 1-2% on cash a decade ago, 4, 5 or 6% (depending on quality of instrument ) isn’t hard to take. If leary of equity valuations, you’re getting paid to wait.
Perhaps you could share the names of the 2 funds you are considering.
Our MFO contributor, Lynn Bolin, has written extensively on conservative portfolio in retirement. Highly recommended.
Doing the math … assuming someone held PRSIX thu both 2008 and 2009 they’d have emerged after 2 years with 99.9% of their initial investment (a larger gain needed to break even).
I tend to shy away from index funds, even "moderate allocations" lifestyle funds as they have to buy even overvalued sectors, unless you pick an equal weight, not market cap weighted. I have not looked to see if any of the "lifestyle" funds use something other than market cap weighting.
If you pay an active management fee, I think you want active management and a fund with high "Active share". To me that means well thought out strategy based on something other than " I'll buy what the other guys are buying".
While it is great to ride up with a boutique manager like AVALX these kind of funds need regular attention.
Sticking with a big firm ( Fidelity, Vanguard, State Street, American Funds) and a Big fund is a good idea because even with manager turnover, there will be some consistency
You need to know what your level of risk is and income needs are too.
I know of them but little else? Have you used them?
There are a few little odd things. For example AOM although 60/40 is 27% tech, although SP500 ( 35% tech) is only 23% of the portfolio.
Can anyone make sense of M* other methods of listing Asset allocation such as "economic exposure
"The Economic Exposure View displays the sensitivity of portfolio return to various asset classes. Economic Exposure will model the impact of these instruments based on their inherent leverage rather than solely based on their market values. Compared to the Classic Asset Allocation, this view provides additional clarity to investors around how funds use derivatives to adjust the portfolio’s risk profile in addition to more clearly depicting sources of risk and return."
This is merely anecdotal, but what I hear over and over is that even below BBB-rated Junk these days is generally of better quality than it once was, particularly leading up to the GFC in '08 or so. My source = listening to BBG's "Real Yield."
Multiple sources — which I don't currently recall — stated that the overall quality
for BBB bonds in 2025 is higher than it was during certain prior periods.
I don't know whether or not this is actually true.
Only a question to AI and what 'it' can find.....
Question: BBB bond quality over past 5 years
----- Over the past five years, the quality of BBB bonds has seen mixed signals: yields have decreased overall, but their risk profile has been a subject of debate. Some sources suggest that while yields have declined from historical highs, the underlying corporate fundamentals of many BBB-rated companies are stronger, with a notable increase in the overall market share of BBB bonds, often attributed to a shift from higher-rated bonds and an abundance of issuance in shorter-term maturities. However, the increasing popularity of this market segment raises concerns about the potential for a future downgrade, especially as market conditions fluctuate.
Yields and returns
Decreased yields: The effective yield for US corporate BBB bonds has fallen over the last five years, though it remains above the long-term average, according to data from YCharts.
Mixed returns: ETFs tracking BBB-rated corporate bonds have shown a range of returns over the last five years, depending on the specific fund's focus, such as maturity or duration. For example, the Bondbloxx BBB Rated 1-5 Year Corporate Bond ETF (BBBS) had a 5-year return of 2.49% while the iShares BBB Rated Corporate Bond ETF (LQDB) has a 5-year return of 0.00% as of a recent reporting date, highlighting the impact of bond-specific factors, such as maturity, on performance.
Higher income: Despite lower yields, some analyses suggest that BBB-rated corporate bonds have historically provided higher average coupon income compared to other investment-grade bonds.
Quality and risk
Increasing market share: The overall market share of BBB-rated debt has increased, as a larger number of companies issue more debt within this rating bracket, potentially making it a more accessible and liquid investment class.
Mixed fundamentals: Some analysis suggests that the quality of BBB-rated companies has improved, with many former A-rated companies maintaining strong cash flows despite their lower credit rating.
Contingent risk: The shift in the market toward BBB-rated bonds has sparked concerns among some analysts about potential downgrades in the future, particularly if market conditions were to worsen.
Focus on specific segments: Some sources recommend focusing on shorter-dated BBB-rated bonds while avoiding the long end of the maturity curve to limit downside risk, especially in more leveraged sectors.
Low default rates: Despite concerns about potential downgrades, BBB bonds still have historically low default rates, typically below 0.36%.
Key takeaway
Increased market share: Over the past five years, BBB-rated bonds have become a more prominent part of the investment landscape, driven by factors like increased issuance and a shift toward shorter-dated maturities.
Divergent performance: Performance has been mixed, with some ETFs showing positive returns while others have been flat or even negative, underscoring the importance of evaluating individual bonds or fund holdings based on their specific characteristics.
Mixed quality concerns: While some BBB-rated companies are considered fundamentally sound, the increased market share has raised concerns about potential future downgrades and market volatility.
Need for careful selection: Investors should conduct thorough due diligence before investing in this asset class to identify the highest-quality issuers and mitigate risks.
Compare the well-known FALN (Fallen Angels) Junk fund: 6.36% current yield. I have owned it in the past.
OSTIX has lower drawdowns than typical junk bond funds. He tends to stay in higher quality end of junk bonds that provides more consistent total return.
With respect to Global Wellington and Global Wellesley funds, they share the same bond manager, Loren Moran. Moran tends to hold higher % of long bond for higher yield. This hurt them when the FED hiked rate in 2022. Now the FED is reversing the rate cycle that benefit the long bonds. Something to bear in mind of Wellington funds. On the equity side, they share the same manager but the goals are slightly different that reflect in the selector selection. Global Wellington focuses more on the capital appreciation side while Global Wellesley focus on dividend and value oriented stocks. I own Global Wellington but will buy Wellesley.
@sma3, agree with point on the Active Shares. The passive asset allocation funds are often used as benchmark to other asset allocation funds. I still prefer active management.