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edited May 2021 in Fund Discussions
FYI, Effective May 1, 2021, Columbia Thermostat Fund has undergone changes to its allocation table. The fund’s assets are allocated to underlying equity and fixed-income funds according to the level of the S&P 500 Index. Based on the annual review, the decision was made to adjust the stock fund/bond fund allocation table. The new allocation is now 10% equity and 90% fixed-income; the prior allocation was 50% equity and 50% fixed-income.


  • Wow, down to 10% equities. Very protective stance - kind of makes a statement.

    Thanks for posting this, Fred.
  • Yes-this was the allocation policy before the 2020 change which established the stock floor at 50%. It's good to see Columbia go back to its original allocation, which differentiated this fund from other allocation funds. I wish they could just stick with the 10% stock floor and stop changing it based on asset inflows, etc !
  • I charted COTZX against a more "static" conservative allocation fund (FCONX) as well as a VWINX. COTZX seems to have done a great job recently Identifying the March 2020 buying opportunity. I wonder if the fund can manage its high allocation to bonds with the same opportunity.

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  • I've never heard of a fund company changing policy 2x in 1 year. Makes me question what management is doing. They probably should just create 2 funds, a conservative one with a 10% floor and a moderate one with with a 50% floor. Huge difference in how you use this fund. Their changing philosophies make it hard to know how it fits in your portfolio.
  • Let's hope the timing is right on twice. The change from 10% equity from 50% is a significant departure. The managers must expect the Fed will not raise rates this year or next year in order to deal with inflation. No further details on the bond sectors the fund is invested in.
  • @MikeM...they are just guessing like the rest of one knows what the markets are going to do over the next several months...likely go up as long as the fed keeps pumping $120B/month, unless something happens to turn investor psychosis, er, I mean psychology..


    Baseball Fan
  • @bee

    FCONX is an ultrashort bond fund....but interesting to compare it to VWINX. It looks like COTZX’s ramp up to higher equity %age in spring-summer of 2020 caused it to shoot past VWINX, after mostly underperforming prior to that (but having less equity than Wellesley?).

    I think a lot of people hoped FPACX, and other high cash funds, would behave like this, but the latter has not let go of much of its cash holdings due to inability to “find value in today’s market” or the like.

    I may have to consider this as a bond-ish holding appropriate during rising rates/threat of rising rates, similar to how I hold VWINX (I am early 40’s, so can afford to be a little more aggressive like that I suppose).
  • Mike M + 1 Wish that Columbia would initiate this policy !
  • A snippet of Morningstar's CTFAX analysis dated 04/30/2021.

    "In 2018, when the current managers took over the fund, a new layer was added to the process that includes an assessment of whether the stock market is 'expensive' or 'normal.' This is determined by comparing the seven-year cyclically-adjusted earnings of the S&P 500 to the past 40 years. When this metric shows markets are in the most expensive quintile over that time period, it is deemed to be expensive. Under an expensive market, the fund’s equity allocation could shift from 10% to 90% (the fund’s historical range) but in 'normal' conditions the equity allocation is floored at 50%. This new approach should help the fund keep pace with its benchmark better when the stocks are rallying but not in their most expensive quintile. The trade-off is that it may not do as well at protecting against sudden sharp drawdowns when its equity allocation is at the floor."
  • Good info, Fred. Haven't really followed it, and it's an eye opener how tightly the allocation is tied, within tight bands, to the S&P. Time for me to take a closer look.
  • Thanks @Observant1. I don't think that was well explained last year when they moved the floor from 10% to 50%. I assumed that was a "permanent" change to the funds mandate. Being able to make a floor change like that, within 1 year, still doesn't make a whole lot of sense to me. Their thematic approach is to adjust based on stock market valuation. Leave the floor at 10% and adjust per their value algorithms. Seems Columbia has over-complicated the funds philosophy IMHO.
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