The Wall Street Journal just gave some mixed ink to five mutual fund firms in a niche asset class. In the WSJ's monthly "investing in funds" special report, Veronica Dagher takes a look at a new type of asset allocation mutual funds, risk-party or balanced-risk funds, which amp up their bonds and cash holdings and then use leverage to boost their returns, to compensate for lower stocks and alternatives allocations.

The WSJ cites Morningstar's count of only four such funds: $4-billion Invesco Balanced-Risk Allocation [profile], $427-million AQR Risk Parity [profile], $107-million Managers AMG FQ Global Essentials [profile] and $22-million Putnam Dynamic Risk Allocation [profile]. Morningstar looks past the name of another fund, Diversified Risk Parity, to classify it as "more of a hedge-fund replication strategy."

Morningstar fund analysis associate director Michael Herbst, GMO asset allocation chief Ben Inker, Putnam global asset allocation chief Jeff Knight and AQR principal Michael Mendelson all weighed in for the article. 

Edited by: Neil Anderson, Managing Editor


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