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Investing question: Does it make sense to own a global allocation fund if you already own US stock funds and International stock funds? Or do you think global allocation funds are best used instead of the aforementioned stock funds? If you do own a global allocation fund, what role does it play in your portfolio ? Thanks.
Allocation funds tend to hold bonds, so you could always add a bond fund or two ... or consolidate everything into an allocation fund or two. *shrug*
It makes sense to reallocate assets within your portfolio in response to market changes, tilting it if not flinging it from side to side. If the US market crashes, it might be time to pour assets into it. Sadly, I don't have the time or nerves to pull that off consistently so I trust the folks at FPA and Intrepid to do it for me.
Some GA funds strike me as more disciplined than others. BBALX is entirely admirable in its combination of low costs and discipline in just making modest adjustments. LCORX is among the most disciplined when it comes to follow the data. FPACX and ICMAX offer different interpretations of an "absolute value" discipline which comes down to "don't buy stocks when you're not paid for the risk you're taking." Mr. Romick tends to wander further afield in pursuit of alternatives to equities, Mr. Wiggins is traditional in adding liquidity to the portfolio rather than adding different sorts of risk assets when small cap valuations are untenable.
Folks like BBALX and LCORX are making macro decisions, FPACX and ICMAX are making micro ones in that they're not judging "the market" as much as they're saying "can't find any new stocks that fit our mandate so ..."
For what that's worth,
So, while not a GA fund, same principle.
T. Rowe Price has a decent GA fund as well in RPGAX.
My global hybrid sleeve holds my global allocation funds and accounts for about 10% of my overall portfolio. The sleeve produces a good dividend yield at about 4.25%. The funds held are CAIBX, PMAIX & TIBAX. PMAIX is classified by M* as a 30% to 50% equity allocation fund but currently has 30% in foreign equity and 17% in domestic equity, 31% in bonds, 13% in other assets and 9% in cash. With this, I felt its best fit was in my global hybrid sleeve.
In addition, the sleeve has a turnover ratio of about 75%. So, the funds seem to be active in changing their holdings and their positioning as the global investment enviornment changes. Also, within my portfolio, the sleeve seems to be the most adaptive to the ever changing market conditions due to the wide spectrum of assets the fund managers can choose from for investment.
With this, there is indeed a fit for global allocation funds within my portfolio.