So-called “go-anywhere” funds are the antithesis of Morningstar’s style-boxes, meant to free managers from constraints imposed by geographical or asset-class restrictions on investment mandates. In a volatile market especially, flexibility in a search for alpha resonated with the investing public, and these funds, also known as “world allocation” funds, were hailed as a significant innovation in the industry’s suite of products.
So how are they doing? Not well, according to The Wall Street Journal.
“World allocation” funds—portfolios that mix global stocks, bonds, currencies and alternative assets—have lost an average 6% this year through Dec. 16, according to fund tracker Morningstar,” the paper writes. “That compares to a 3% gain for the Dow Jones Industrial Average and 8% increase for the Barclays Capital US Aggregate Bond index.”
But in spite of the overall poor performance, the funds remain popular, the Journal notes, with investors pouring $16 billion into world-allocation funds this year through November, after adding an additional $23 billion in 2010.