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Monday, November 5, 2012

Forward Gives Asset Allocation a New Name

Reported by Ben Geier

Forward Management has made improvements to their asset allocation funds, changing the suite to help investors, according to a company news release.

The five funds have been renamed the Forward Global Asset Allocation Series. It includes funds with various growth and income objectives.

Additionally, Forward has globalized the mix of mutual funds to increase diversification and shifted the basis for weighting from market capitalization to GDP.

For more information, read the news release below.

Company Press Release


Adds GDP weighting, more alternative strategies in underlying funds

San Francisco, November 5, 2012 – Forward (Forward Management, LLC) (www.forwardinvesting.com) has enhanced its suite of asset allocation funds, adapting them to help investors meet the challenges of an era where we have not only historically low yields combined with elevated risk levels, but also generally lower returns.The funds have been renamed the Forward Global Asset Allocation Series.

The series comprises five mutual funds with varying growth and income objectives. It is designed to provide bank trust departments and other financial advisors with a core portfolio solution that can be tailored to individual client needs. The five funds include: Forward Growth Fund, Forward Growth & Income Fund, Forward Income Builder Fund, Forward Balanced Fund and Forward Income & Growth Fund.

“Over the past six years Forward has developed a wide array of non-traditional and global strategies, giving us the components for an asset allocation solution that’s in sync with today’s realities,” said Alan Reid, CEO of Forward. “These are not your father’s asset allocation funds.”

While generally preserving the configuration of its previous asset allocation suite, Forward has reduced the number of portfolios from six to five, pulling the Aggressive Growth portfolio from the series. That fund will be renamed the Forward Multi-Strategy Fund, although its objective is unchanged.

Forward has also updated the portfolio series by:

- Globalizing the mix of underlying Forward mutual funds for greater diversification and more exposure to global growth and income opportunities. With few exceptions, the underlying funds will operate with a global or international strategy.

“While developing nations are generally faster-growing and more fiscally stable than developed countries, studies show that most investor portfolios are significantly underweight in their exposure to emerging and frontier nations,” said Nathan J. Rowader, Forward’s Director of Investments and lead Portfolio Manager for the asset allocation fund suite. “This is why globalization was one of our prime objectives in updating our asset allocation funds.”

- Shifting the basis for global portfolio weightings from market capitalization to Gross Domestic Product (GDP). Market-cap weightings skew portfolios toward developed economies with established capital markets while underweighting faster growing, less developed markets such as China and Brazil, said Rowader. For example, as of December 31, 2011, U.S. stocks represented a 39.3% weighting on a market-cap basis vs. 25.3% on a GDP-weighted basis. Emerging markets, on the other hand, had a 20.9% market-cap weighting vs. a 27.6% GDP weighting. Consistent with the shift to GDP weighting of portfolios, Forward has changed the fund series’ portfolio benchmarks to global indexes that are also GDP-weighted.*

- Increasing their slant toward alternative strategies and real assets, with the aim of better managing downside and correlation risks as well as adding growth and income potential. The portfolios in the suite draw on underlying Forward mutual funds asset classes including emerging markets corporate debt, international dividend, emerging markets preferred dividend, long/short commodities, managed futures, and frontier markets, among others.

- Systematically adapting fund allocations to changing global conditions. Departing from a traditional “set-it-and-forget-it” approach, the asset allocation team monthly adjusts the mix of underlying strategies in each portfolio, utilizing a statistical allocation process and state-of-the-art techniques for return and volatility forecasting.

- Putting more focus on volatility management. Forward factors the volatility of each underlying fund’s benchmark into its monthly portfolio rebalancing process. The investment team seeks to limit each portfolio’s volatility to some percentage of the benchmark’s volatility, depending on the risk/reward profile for which the portfolio is designed.

While the Forward Income Builder Fund remains part of Forward’s asset allocation series, it will also be available as a stand-alone product on intermediary and institutional platforms. Designed to address the current low-yield climate, Forward Income Builder Fund looks beyond traditional income sources to opportunities that investors might not typically consider, such as international real estate, global infrastructure and high-yield emerging markets debt.

“We believe asset allocation funds are more relevant than ever, as they provide a level of diversification, adaptability and risk management that are very difficult for investors to achieve on their own. But fund managers need to keep evolving them to fit the specific challenges and opportunities of the times,” said Reid. “With this new version of our asset allocation series, Forward is striving to be on the forefront of that evolution.”  

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