Mutual Funds


One-Stop Global Funds

Russel Kinnel

Most of these funds that invest in stocks and bonds from all over the worlds come with a sales charge. Here are some options to avoid that extra cost.



News that American Funds has started a new fund that will invest in stocks and bonds all over the world is noteworthy in two ways. First, Global Balanced Fund (symbol GBLAX), launched February 1, is only the second stock-holding fund that American has launched over the past decade. With American's team-managed approach and low expenses, the new fund will probably be a winner.

And that brings me to the second notable aspect of the launch: For some reason, funds that levy sales charges, as the American funds usually do, dominate the world-allocation category. The best include Blackrock Global Allocation (MDLOX), run by Dennis Stattman; IVA Worldwide (IVWAX), managed by Charles de Vaulx and Chuck Lardemelle; and First Eagle Global (SGENX), which used to be run by de Vaulx and Lardemelle but is now helmed by Abhay Deshpande and Matthew McLennan.

Slim Pickings

On the no-load side, Fidelity Global Balanced (FGBLX) has been a decent performer the past three years, during which most of its current managers have been on board. But I'm lukewarm toward the fund because it hews closely to the MSCI World index for its sector and regional exposure. That largely keeps it out of emerging nations and prevents its managers from moving to the markets that offer the best opportunities.

Probably the best no-load choice is Pimco All Asset All Authority (PAUDX), run by Rob Arnott. As the name implies, Arnott has broad latitude to switch among an array of asset classes and does so using Pimco funds. The fund is worth considering if you want to invest with an active asset allocator.

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Beyond Pimco, you'll have to think outside the box if you want broad diversification and want to avoid a sales charge. You could, for example, invest in target-date funds. These funds, which cater to investors saving for retirement, provide a mix of foreign and U.S. stocks and bonds, albeit with a bit of a bias toward the U.S. The Vanguard and T. Rowe Price families offer fine target funds.

Another idea is to add a domestic asset-allocation fund to a global-stock fund. You can take a bold allocation fund, such as FPA Crescent (FPACX), and pair it with something like Dodge & Cox Global (DODWX). Crescent's Steve Romick will invest in whatever appears to offer the best potential reward relative to risk; he even occasionally sells stocks short. Romick has built an outstanding record over 18 years (Crescent is a member of the Kiplinger 25). Dodge & Cox's value-oriented managers keep the allocation between U.S. and foreign stocks fairly steady, so it complements Crescent nicely.

You can also combine a global-stock fund with a go-anywhere bond fund. Pimco Eqs Pathfinder (PTHDX) is a conservative world-stock fund run by Mutual Series veterans Anne Gudefin and Charles Lahr. The bargain-hunting duo will move into cash if they can't find enough cheap stocks, but they don't invest much in bonds. That's what Dan Fuss and Kathleen Gaffney, managers of Loomis Sayles Bond (LSBRX), can do for you. They make aggressive shifts into countries or sectors of the bond market that appear the most attractive. (Loomis Sayles Bond is also a member of the Kiplinger 25.)

A rising star in the world-allocation category is Artisan Global Value (ARTGX). David Samra and Dan O'Keefe, longtime managers of Artisan International Value (ARTKX), launched Global Value in 2007. The fund has just $46 million in assets, so the managers have plenty of flexibility to go where they find value. I'd pair Global Value with Manning & Napier Pro-Blend Moderate Term (EXBAX), which leans slightly toward growth stocks and adjusts its asset mix based on the managers' economic forecasts and corporate earnings trends. The 11-man management team has also done a good job picking stocks, helping Pro-Blend Moderate to outperform its moderate-allocation peers consistently over the years.

Columnist Russel Kinnel is director of mutual fund research for Morningstar and editor of its monthly Fundinvestor newsletter.



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