By Tom Bradley

I’ve had lots of feedback on a posting I did on Balanced Funds – some as comments on the blog and other as feedback to me directly.

A comment from a reader aptly named You Missed The Point said, “A good balanced fund with low fees and experienced with active asset allocation would be a great addition to your fund line up. Most people get asset selection wrong...liquidating at market lows or buying at market highs.” Industry consultant Dan Hallett built on the theme by pointing out that for the average investor the behavioral benefits of Balanced Funds may outweigh their other shortcomings.

I’ve said numerous times that we’re pleased with how our clients hung in at the bottom (only a few didn’t) and indeed, did some re-balancing towards equities (it was hard to do, but many did). But these readers have a point. If all our clients had been in a balanced fund (hypothetically), and the fund followed our advice (which it would by design), then on average they would have done better. Everyone would have gone up with more risk than they went down with, instead of just some.

These comments have got me thinking. At this stage, and for the type of client we have (engaged, interested, long term), a lineup without a ‘one-size fits all’ balanced fund or Wrap product is appropriate. They are capable of building their own using our funds and advice. But through that advice and our communications, we have to work harder at eliminating the slippage between what our clients should do and what they actually do. The less sliding the better.

Related Reading:
Are Balanced Funds Overrated?
Asset Allocation and Hindsight Bias