Balanced accounts.For hybrid stock and bond funds, asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. is crucial Brokerage firms have a recommended asset allocation mix for average investors: 60% stocks, 35% bonds and 5% cash, give or take a percentage point. But for portfolio managers who run balanced mutual funds Balanced mutual fund This is a fund that buys common stock, preferred stock, and bonds. The same as a balanced fund. , also called domestic hybrid portfolios, a greater emphasis on technology stocks (surprise!) and a smaller bond component have spelled success this year. Balanced funds Balanced Fund A mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. Also known as an asset allocation fund. in the top tier, with a flexible blend, have outperformed most market averages this year. Some of the managers of these portfolios did better than their peers partly because more than 70% of their funds' assets were in equities. Others who stuck to the more traditional stocks-to-bonds asset mix reaped the rewards of a heavy weighting in high-flying high-flying adj (fig) → ambitieux/euse, de haut niveau high-flying high adj (person) → erfolgreich; (lifestyle technology stocks and shorter-maturity bonds. Through April 28, 2000, the average balanced fund had a cumulative total return of 0.71%, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Morningstar, a mutual fund research firm in Chicago. That's slightly better than the negative return of 1.14% for the Standard & Poor's 500-stock index for the same period. One fund that did much better than its peers was the $45 million Green Century Balanced fund (Nasdaq: GCBLX), an environmentally responsible fund. It returned a whopping 20.95% year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. through the end of April, landing it among the top five, according to Morningstar. "The only thing we do is invest in green and clean companies," says Jack Robinson Jack Robinson may refer to:
Robinson, who is also president of Winslow Management Co. in Boston, the subadvisor to Green Century Balanced, says that since the portfolio must have 25% of its assets in bonds, he likes high-yielding, intermediate-term Intermediate-term Typically one-ten years. intermediate-term Of or relating to an investment with an expected holding period somewhere between short-term and long-term. corporate bonds. Some of his bond holdings include Sparkling Spring Waters, with an 11.5% coupon maturing in November 2007, currently sporting a yield of 14%; and Kindercare Learning Centers' bonds with a 9.5% coupon, maturing in 2009 and yielding around 10%. As for the stock component, he likes high-tech companies with good growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. . The top holding in his portfolio is NetOptix (Nasdaq: OPTX), a maker of light-based fiber-optic equipment and filters. The company is being acquired by Corning (NYSE NYSE See: New York Stock Exchange : GLW GLW Glasgow Airport (UK) GLW Gross Laden Weight GLW Good Lady Wife (Australia) ), a diversified diversified (di·verˑ·s technology firm--a perfect fit because NetOptix's business will complement Corning's fiberoptics fiberoptics /fi·ber·op·tics/ (fi?ber-op´tiks) the transmission of an image along flexible bundles of glass or plastic fibers, each of which carries an element of the image. division. Also, both adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. "green" business practices. Then there's the $13 million Avondale Hester Total Return fund (Nasdaq: AHTRX). John Gunthorp, co-manager Co-manager A second-tier Participant, ranked by size of participation. , explains that the fund is more a flexible rather than a balanced portfolio. As much as 90% of the portfolio has been in stocks--currently, it's around 88%. And about 35% of those equity positions are in technology companies. Gunthorp, who is also executive vice president of Hester Capital Management in Austin, Texas, says he tries to find companies whose "fundamentals are starting to improve along with balance sheet improvement," and buy them before other investors notice their inherent value. Among his top stock holdings are General Electric (NYSE: GE), about 8% of assets, and Adobe Systems Adobe Systems Incorporated (pronounced a-DOE-bee IPA: /əˈdoʊbiː/) (NASDAQ: ADBE) (LSE: ABS) is an American computer software company headquartered in San Jose, California, USA. (Nasdaq: ADBE ADBE Adobe Systems, Inc. (stock symbol) ), about 7% of assets. Currently, the fund has about 10% in bonds, mainly in agency securities like those issued by the Federal Home Loan Bank Board. The large concentration in stocks helped the Avondale Hester fund achieve a 9.17% return, still higher than its peer group. But before you use a balanced mutual fund as a proxy for asset allocation, examine the prospectus carefully to make sure it reflects the mix most suitable for your long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investment goals.
TOP 5 DOMESTIC HYBRID FUNDS
Fund Name (Ticker) Year-to-date 1-Year
Total Return(*) Total Return
Smith Barney Security Growth
(SAFEX) 22.01 21.05
Green Century Balanced (GCBLX) 20.95 76.39
One Fund Income & Growth (ONIGX) 10.36 11.00
Avondale Hester Total Return
(AHTRX) 9.17 15.07
Thompson Plumb Balanced (THPBX) 8.04 8.87
Domestic Hybrid Fund Averages 0.71 8.49
Fund Name (Ticker) 3-Year 5-Year
Total Return Total Return
Smith Barney Security Growth
(SAFEX) 8.57 N/A
Green Century Balanced (GCBLX) 23.61 22.76
One Fund Income & Growth (ONIGX) 12.24 15.33
Avondale Hester Total Return
(AHTRX) 17.90 17.13
Thompson Plumb Balanced (THPBX) 15.96 18.15
Domestic Hybrid Fund Averages 13.31 15.83
Fund Name (Ticker) Toll-Free Minimum
Number Initial
Investment
Smith Barney Security Growth
(SAFEX) 800-451-2010 Closed
Green Century Balanced (GCBLX) 800-934-7336 $2,000
One Fund Income & Growth (ONIGX) 800-578-8078 500
Avondale Hester Total Return
(AHTRX) 800-282-2340 1,000
Thompson Plumb Balanced (THPBX) 888-999-0887 1,000
Domestic Hybrid Fund Averages
(*) Ranked by cumulative total return as of 4/28/00 Source: Morningstar Inc.
BOTTOM 5 DOMESTIC HYBRID FUNDS
Fund Name (Ticker) Year-to-date 1-Year
Total Return(*) Total Return
Lindner Asset Allocation (LDDVX) -9.26 10.01
Flag Investors Value Builder -9.14 13.81
(FLVBX)
CGM Mutual (LOMMX) -7.99 20.52
Nvest Balanced (NEFBX) -7.04 -3.75
CornerCap Balanced (CBLFX) -5.50 0.70
Domestic Hybrid Fund Averages 0.71 8.49
Fund Name (Ticker) 3-Year 5-Year
Total Return Total Return
Lindner Asset Allocation (LDDVX) 6.37 10.28
Flag Investors Value Builder 18.28 22.30
(FLVBX)
CGM Mutual (LOMMX) 12.16 16.74
Nvest Balanced (NEFBX) 6.96 12.60
CornerCap Balanced (CBLFX) N/A N/A
Domestic Hybrid Fund Averages 13.31 15.83
Fund Name (Ticker) Toll-Free Minimum
Number Initial
Investment
Lindner Asset Allocation (LDDVX) 800-995-7777 2,000
Flag Investors Value Builder 800-767-3524 2,000
(FLVBX)
CGM Mutual (LOMMX) 800-346-4048 2,500
Nvest Balanced (NEFBX) 800-226-5478 2,500
CornerCap Balanced (CBLFX) 800-728-0670 2,000
Domestic Hybrid Fund Averages
(*) Ranked by cumulative total return as of 4/281/00 Source: Morningstar Inc. |
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