Last October, we researched the Fidelity Monthly Income Fund as a potential Holding, and recommended it for your consideration.
Looks like it was a good choice! We have agreement in the house!
News from globeandmail.com
Balanced funds that held up under pressure
Friday, July 27, 2012
What we're looking at
Amid tense financial market conditions, balanced funds remain the most
popular choice of investors by far. The mix of stocks and bonds in these funds
clearly offers some comfort. But which Canadian balanced funds have managed the
financial market volatility of the past few years the best? For answers, let's
consult the independent mutual fund analyst Dave Paterson of D.A. Paterson &
Mr. Paterson says his focus in evaluating funds is their ability to manage
volatility. For this screen, he applied two measures:
Standard deviation: Shows how much variation there is in a fund's monthly
gains and losses; only funds with a five-year standard deviation of less than 12
made the list (the lower the number, the better).
Sharpe ratio: Adjusts returns for the amount of risk being taken on; funds
presented here have a five-year ratio of more than 0.13 (the higher the ratio –
devised by economist William Sharpe – the better the blend of risk and
Other factors built into this screen: Management expenses ratios had to be
below 2.25 per cent, fund-of-fund products were excluded and upfront investment
requirements had to be $25,000 or less. Note: GBC funds have a $100,000 minimum,
but Mr. Paterson said a $10,000 minimum applies when the company's funds are
bought through an investment dealer rather than direct from GBC.
What we found
There are three different categories of Canadian balanced funds – one with an
emphasis on stocks, one with roughly equal amounts of stocks and bonds and one
that mainly holds bonds. Given how bonds have outperformed stocks over the past
five years, it's not surprising that this latter category produced the most
funds in our screen results. Looking ahead, balanced funds with an emphasis on
stocks would be best positioned for an economic rebound and stronger stock
Returns to June 30 (%)
FUNDS THAT FIGHT VOLATILITY