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Trending ... Three Top Performing Global Allocation Funds
This week’s edition will focus on global allocation funds. These funds seek capital appreciation by investing in a variety of asset classes including equities and bonds from emerging and developed markets across the globe. These funds typically come with a basket of mixed market cap equities across different sectors.
Those are not global allocation funds, but instead standard global growth funds.
I’m tempted to say, “What’s in a name? That which we call a rose ... “
Kidding aside, Ol’Skeet inadvertently reversed a couple key words in the title which do impact meaning (or at least emphasis) here.
- Ol’Skeet’s title: “Trending ... Top Three Global Allocation Funds”
- What the author had: “Trending ... Three Top Global Allocation Funds”
In the first case, Ol’Skeet’s title suggests that these three funds are “the top“ (best) funds in their class.
In the second case, the author intended to say only that these were “three among the best” in their class.
I also agree with @hmgodwin in that these three funds sound too aggressive to conform with my understanding of what a global allocation fund is. Here’s the dead giveaway from the article: “Global allocation funds tend to be highly volatile and are suited for aggressive investors.” That sentence makes one wonder just what assets the fund is allocating among?
The global allocation genre evolved long after I cut my teeth on investing. When I started out 50+ years ago the choices were pretty much: domestic equity, global equity, balanced. Pretty plain and simple. So my understanding of what a global allocation fund invests in is limited to some familiarity with RPGAX. That one is: 60% U.S. / international equity; 30% U.S. / international bond; and 10% in an out-of-house hedge fund. Likely, there are other variations elsewhere.
Thanks @hank ... Old_Skeet made a goof in the wording of the title. Want be the first one ... nor, the last.
And, it seems the author did as well as M* list all the above funds, in the article, as World Large Stock funds and not World Allocation funds as the article title would lead one to believe.
These are all global equity funds. I suppose they are all sort of "allocation" funds in the sense that they allocate their holdings between foreign and domestic stocks. But that's not what's claimed on the page:
These funds seek capital appreciation by investing in a variety of asset classes including equities and bonds from emerging and developed markets across the globe.
The largest fund by AUM on the site's global allocation list is VTIBX. Not global (pure international), not allocation (pure bond). Your guess is as good as mine.
Regarding "what's in a name", these funds could not call themselves global allocation funds. The SEC would be all over them for misleading names.
The author really did intend to say that these are the top (best) funds in some class (though we're not really sure what class that is): "we select the top three funds with the highest one-year trailing total returns."
He goes on to say that BGAFX, with its 1.15% ER is cheap, relative to its peers (like VTIBX?). Well sure, if one compares this with class C (embedded level load) shares of other funds. That's precisely what he's doing.
The second fund on its top three list is PRJCX. That comes in a noload class Z, with a 0.94% ER available NTF at Schwab. The third fund is another C class share: MSOPX. The A class shares of MGGPX are available NTF at many brokerages, and cost 1.23%, compared with the 1.95% ER (including level load) of the C shares.
IMHO, funds like SGENX MDLOX RPGAX GAOAX are prime examples of global allocation funds. These funds combine US and International stocks and bonds with some cash, and in the case of SGENX a small allocation to gold as "an insurance policy" as Jean-Marie Eveillard described it.
Comments
Kidding aside, Ol’Skeet inadvertently reversed a couple key words in the title which do impact meaning (or at least emphasis) here.
- Ol’Skeet’s title: “Trending ... Top Three Global Allocation Funds”
- What the author had: “Trending ... Three Top Global Allocation Funds”
In the first case, Ol’Skeet’s title suggests that these three funds are “the top“ (best) funds in their class.
In the second case, the author intended to say only that these were “three among the best” in their class.
I also agree with @hmgodwin in that these three funds sound too aggressive to conform with my understanding of what a global allocation fund is. Here’s the dead giveaway from the article: “Global allocation funds tend to be highly volatile and are suited for aggressive investors.” That sentence makes one wonder just what assets the fund is allocating among?
The global allocation genre evolved long after I cut my teeth on investing. When I started out 50+ years ago the choices were pretty much: domestic equity, global equity, balanced. Pretty plain and simple. So my understanding of what a global allocation fund invests in is limited to some familiarity with RPGAX. That one is: 60% U.S. / international equity; 30% U.S. / international bond; and 10% in an out-of-house hedge fund. Likely, there are other variations elsewhere.
And, it seems the author did as well as M* list all the above funds, in the article, as World Large Stock funds and not World Allocation funds as the article title would lead one to believe.
This makes it a ... Fake Article.
Regarding "what's in a name", these funds could not call themselves global allocation funds. The SEC would be all over them for misleading names.
The author really did intend to say that these are the top (best) funds in some class (though we're not really sure what class that is): "we select the top three funds with the highest one-year trailing total returns."
He goes on to say that BGAFX, with its 1.15% ER is cheap, relative to its peers (like VTIBX?). Well sure, if one compares this with class C (embedded level load) shares of other funds. That's precisely what he's doing.
The second fund on its top three list is PRJCX. That comes in a noload class Z, with a 0.94% ER available NTF at Schwab. The third fund is another C class share: MSOPX. The A class shares of MGGPX are available NTF at many brokerages, and cost 1.23%, compared with the 1.95% ER (including level load) of the C shares.