First, we select the top trending category from more than 200 categories listed on MutualFunds.com based on the percentage increase in monthly viewership. From the top trending category, we select the top three funds with the highest one-year trailing total returns. To ensure the quality and staying power of funds, we only look at mutual funds with a minimum of $250 million in assets and a track record of at least one year. We also remove mutual funds that are closed to new investors and not available for investment outside registered accounts, such as retirement or 529 accounts.
In this week’s edition, we analyze the top three Balanced Allocation Bond Funds. These funds invest in a portfolio of stocks and bonds that are automatically rebalanced over time. While the most common balanced funds are target date retirement funds, other funds have a set asset allocation designed to achieve a specific goal, such as income or conservative growth.
Our breakdown of each fund includes key aspects, such as one-year performance, fund expenses, investment style, and management teams, to give you an overview of how these funds hold up against their peers.
Be sure to check out the Balanced Allocation Funds page to find out more about other funds in this category as well.
1. Oakmark Equity and Income Fund (OAKBX)
The top fund in our list this week is the Oakmark Equity and Income Fund (OAKBX). It generated a solid 40.57% trailing one-year total return with a 0.84% expense ratio and a 0.97% yield, putting it in the middle of the road in terms of yield and expenses.
The fund invests in medium and low-quality debt securities that have higher yield potential but present greater investment and credit risk than higher-quality securities. In addition, the fund invests in medium-cap stocks that the management team believes are priced substantially below estimated intrinsic value. It also maintains a relatively small portfolio that translates to greater volatility than many other funds in the category.
The fund is co-managed by Clyde McGregor, Colin Hudson, and Adam Abbas, who have been with Harris Associates since 1981, 2005, and 2018, respectively. Mr. McGregor, CFA, is the most senior manager with a 25 year tenure and was the first recipient of the Lipper Award for Fund Excellence, which is presented to investment managers for achievements over their careers.
The fund’s portfolio consists of 46 securities, including 67.6% common stocks, 26.8% fixed income securities, and 5.6% short-term investments. The top two holdings include Bank of America at 5.1% of the portfolio and Alphabet Inc. at 5.0% of the portfolio. With an equity turnover of 22%, the fund is very much actively managed by the team.
Learn more about different portfolio management concepts here.
2. FPA Crescent Fund (FPACX)
The number two fund on our list this week is the FPA Crescent Fund (FPACX). The fund delivered a solid 38.94% one-year total return with a 1.13% expense ratio and a 0.25% yield, making it the most expensive and lowest yielding fund on the list.
The fund aims to generate equity-like returns over the long term, take less risk than the market, and avoid permanent impairment of capital. With an independent, bottom-up, fundamental research process, the fund managers seek to minimize risk while investing across capital structure geographies, sectors, and market caps seeking a compelling risk-reward ratio.
The fund is co-managed by Mark Landecker, Steven Romick, and Brian Selmo, who have been with the firm since 2009, 1996, and 2008, respectively. Mr. Landecker, CFA, previously served as portfolio manager at Kinney Asset Management and Arrow Investments while Mr. Romick, CFA, was formerly the Chairman of Crescent Management.
The fund’s portfolio consists of 69.7% common stocks, 25.2% cash and equivalents, and 2.5% credit fixed income. In terms of concentration, Alphabet Inc., Comcast Corp., and LafargeHolcim were the only three parts of the portfolio with more than a 3% allocation, although 16.2% of the portfolio is concentrated in communication services.
Find out about the funds suitable for your portfolio by using our free screener.
3. Dodge & Cox Balanced Fund (DODBX)
The third place on the list belongs to the Dodge & Cox Balanced Fund (DODBX). The fund generated a robust 36.05% trailing one-year return with a 0.53% expense ratio and a 1.76% yield, making it the cheapest and highest yielding fund in the group.
The fund invests in a diverse portfolio of equities and debt securities. In particular, the fund focuses on medium-to-large well-established companies that it believes are temporarily undervalued by the stock market but have a favorable outlook for long-term growth. Up to 20% of its debt portfolio may also be invested in securities rated below investment grade.
The fund is co-managed by a large team divided into two committees. The equity investment committee has nine members with an average tenure of 22 years while the fixed income investment committee has eight members with an average tenure of 21 years.
The fund’s portfolio is divided into 62.3% equities, 26.8% fixed income securities, 5.4% hedged equity, 1.6% hybrid securities, and 3.9% net cash and other securities. Within the equity portion of the portfolio, the company holds 68 companies concentrated in financials (20.2%), information technology (13.7%), and healthcare (11.6%). The fixed income portfolio consists of 58 securities with an effective duration of 5.4 years.
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The Bottom Line
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Note: Trailing one-year total returns (daily) as of June 3, 2021.