Call Me Global Al

Everyone’s pitching “Global Allocation” funds these days, the ten-year numbers on the few that have them look much better than your typical all-stock fund.  These funds can “go anywhere” both geographically and by asset class (bonds, stocks, gold, cash).  Even when they hold cash that cash doesn’t have to be in US currency per se.

There are only a handful of global allocation (or global al as we say on the factory floor) funds with long-term track records and the same manager throughout.  BlackRock’s Global Allocation fund is one of them.  Investment News caught up with long-time manager Dennis Stattman to talk about the new-found trendiness in his neck of the woods…

With $53.4 billion in assets, one would think that Mr. Stattman would be thrilled by the fund’s success and popularity. The fund has beat its peers over the past three-, five- and 10-year periods, according to Morningstar Inc.

Nevertheless, Mr. Stattman is worried. For one thing, he’s concerned that all the fund firms getting into the go-anywhere space may not understand how difficult it can be. And ultimately, he fears that clients may get hurt.

Recently, Mr. Stattman sat down with InvestmentNews’ Jessica Toonkel to talk about the fund, his process and what advisers need to ask managers when selecting a global-allocation fund.

With so many firms launching global-allocation funds, are you worried that these may becoming gimmicks?

I think it’s ironic that so many firms are now coming out with these products, because I believe that global flexible investing is what most investors ought to have at the foundation of their portfolios. It’s almost nonsensical to me to think, for most investors, that it would be any other way. Why would an investor not elect to choose from the broadest universe of investment possibilities that she or he could?

The industry is just very lately coming around to this, not because it thought it was a good idea but because of poor results that so many traditional mutual funds have delivered in terms of basic risk and return over extended periods of time — and also because the global flexible category has tended to be an exception to that trend.

Someone asked a colleague of mine, “Gee, what you are doing sounds really sensible. Why don’t all investors do that?” Because it’s really hard.

I’m a fan of the style for a lot of reasons, but with so many new ones popping up, now is a time to be selective, not generous with capital.  They won’t all get the “al” part right.


Five questions: Dennis Stattman (Investment News)

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