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Friday, September 20, 2013

WSJ's Maxey Worries About Tactical Funds

News summary by MFWire's editors

Just because you can create a new tactical-allocation fund doesn't mean you should.

The Wall Street Journal's Daisy Maxey reports that although many new versions of tactical allocation funds are being created, financial advisers aren't convinced that they're worth their salt. Maxey writes that there are 41 mutual funds with "tactical" in their names, including 18 launched since the beginning of 2012.

These funds are underperforming balanced portfolios, gaining 6.9 percent over 12 months and 7.7 percent annually over three years through August 31, compared to a classically balanced, 60/40, passively managed portfolio, which would have gained 10.2 percent in the S&P 500 and 12.1 percent in the Barclays Aggregate Bond Index during the same time period.

Maxey spoke to Morningstar's John Rekenthaler, who said that as these kinds of funds come after crashes, they're selling investors protection at the wrong time.

To read more, click here.  

Edited by: Casey Quinlan


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