I find that this M* category (Conservative Allocation) has some of the most "diverse" active strategies that attempt to achieve what M* defines as:
"...portfolios that seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold smaller positions in stocks than moderate-allocation portfolios. These portfolios typically have 20% to 50% of assets in equities and 50% to 80% of assets in fixed income and cash."M* source:
morningstar defines Conservative_Allocation_CategoryFor example DIFIX has a stock portfolio that focuses on Real Estate and Finance and a bond portfolio that is highly concentrated in High Yield bonds. USBLX and VTMFX seem to favor holding stocks using the S&P 500 index and holding mostly tax free Municipal Bonds.
The list of conservative allocation funds with long term success based on,
- beating its 1, 3, and 5 year category average of 4.29%, 6.14% & 7.01%,
- having reasonable expense ratio of under 1%,
- requiring less than $5K to invest,
- having a M* ranking of 4* or 5*,
- and not charging a load
is displayed below:
Comments
Here's the three funds that out performed VWINX (DIFIX, PGDIX, and COTZX) over the most recent 5 year period:
What VWINX did in 2007-2009 extremely well was protect to the downside. Here is VWINX charted against two of the three funds that existed 10 year ago:
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/conservative-allocation
Its long-term record, considering volatility, is hard to beat: Since inception in 1970 it has returned 10.06% annualized; its worst yearly return was in 2008 at -9.8%.
So for 45 years it has returned essentially what the stock market has returned, but with much less volatility (beta .53).
Regards,
Ted
I must be missing something. Since origin, summer 1970, it has more than doubled SP500.
Wellington and DODBX have done notably better, but Windsor, FCNTX, and SEQUX have all done multiples better, Sequoia 6x or so. If I am reading the graphs right.
Some manager changes in there, of course.
BTW / US News' charts aren't adjusted for distributions, which to me makes them utterly worthless. That is one thing M* gets right.
Regards,
Ted
@linter makes the point that these funds are in different classes so any comparison is not worthwhile in this discussion.
Yeah. I hear that a lot. Maybe, But, I'll submit that if you're 95 years old, they are very much the same.
I am very happy, thus far, with their performance over the years and have held one of them (FKINX) for better than fifty years.
Old_Skeet
A second benefit of the "slice em & dice em" approach is that it leads to rebalancing. Not all slices appreciate at the same rate or speed. So over time a smart investor may lighten up on his best performers periodically and re allocate the gains into investments that still have a lot further to run.
I like to slice and dice as much as anyone. Some of the slices are downright irrational. PRWCX is in the "equity" folder. OAKBX is in the "hybrid" folder along with the likes of PRPFX. While DODBX is placed in the "balanced" folder. Since all three funds are very similar, it's very likely the slicing and dicing here has meaning to no one else but myself.
FWIW
alot of patience.