Seeking to Achieve a More Favorable Balance?

March 2019

  • Stephen M. Goddard
    Stephen M. Goddard, CFA
    Lead Portfolio Manager
  • Gary B. Cloud
    Gary B. Cloud, CFA
    Portfolio Manager

For decades, investors have relied on traditional balanced funds to gain portfolio diversification and minimize volatility. With a classic 60% allocation to equities and a 40% allocation to fixed income, balanced funds have historically provided long-term oriented investors with impressive relative capital appreciation, but with lower volatility as compared to an all-equity portfolio.For investors seeking the benefits of a professionally managed blend of stocks and bonds, consider the following two advantages:

1. Fewer Sharp Declines

Over the long-term, a hypothetical balanced portfolio comprised of 60% in the S&P 500 Index and 40% in the Bloomberg Barclays Capital Intermediate U.S. Government/Credit Index protected capital better than an all-equity portfolio. Over the course of four decades (1978-2018), the S&P 500 Index experienced a loss of between 10% - 20% once and a loss of more than 20% twice. The balanced portfolio experienced zero losses of between 10% and 20% over the period, and a loss of over 20% just once, in 2008, when it posted a loss of 22%.

2. More Favorable Risk/Return Relationship

As might be expected, the S&P 500 Index has provided more return than the Bloomberg Barclays Capital Intermediate U.S. Government/Credit Index over time. However, the additional return is accompanied by more risk. During the 1978-2018 time frame, the S&P 500 Index returned 11.39% with a risk factor of 15.20%, as measured by standard deviation, whereas the Bloomberg Barclays Capital Intermediate U.S. Government/Credit Index returned 6.84% with a standard deviation of only 4.16%. A hypothetical balanced 60/40 allocation enjoyed 86% of the return of an all-equity portfolio with 39% less risk during the same time frame.

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To view the top 10 holdings of a Fund, please click the Fund name: Cornerstone Growth, Focus, Cornerstone Mid Cap 30, Cornerstone Large Growth, Cornerstone Value, Total Return, Equity and Income, Balanced, BP Energy, BP Midstream, Gas Utility, Japan, Japan Small Cap, Large Cap Financial, Small Cap Financial, Technology. Fund holdings are subject to change and not recommendations to buy or sell any security.

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To view the Morningstar ratings for the Japan Fund, please click here. (Media - TD Ameritrade) JPSIX received Overall Morningstar rating of 5 Stars based on risk-adjusted returns among 42 Japan Stock funds, as of 3/31/19.

To view the Morningstar ratings, please click here.

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