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These Go-Anywhere Funds Make It Look Easy

This simple screen turns up well-run balanced funds.

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Balanced funds have a reputation for being stodgy mixes of core domestic stocks and bonds, but some can range wider than others. When considering one of the more flexible variety, a proven track record is probably the first criterion for which to look. Many of these managers can go anywhere in the world in search of the most attractive investments or hold big slugs of cash, and knowing how and when to make those shifts can be difficult to pull off.

At last count, the average manager tenure for moderate-, conservative-, and world-allocation funds was five years. This screen, however, focuses on funds whose managers have at least 10 years of experience under their belts and top-third showings for that time frame. Limiting the results to funds with Morningstar Risk ratings of average or lower pulls offerings that provided a relatively smooth ride to fundholders during that time frame.

To run the screen yourself, click  here.

Dennis Stattman has skippered  BlackRock Global Allocation (MDLOX) since its 1989 inception. Top-down work guides the portfolio-construction process, and he invests in stocks and bonds of all stripes. Stattman has kept a lid on risk over the years by running a fairly diffuse portfolio. His cautious approach prior to 2008's market meltdown, which included building a large cash stake, helped the fund hold up better than most world-allocation funds. He funneled some of that cash into convertible bonds heading into 2009, so the fund's performance during the rally was more subdued. But over the long term, Stattman's relatively cautious approach and flexibility have paid off.

Steve Romick, longtime manager of  FPA Crescent (FPACX), goes anywhere that will provide market-beating returns without a lot of risk. He isn't afraid to load up on cash, as he did in 2008 when the fund held upward of 30% in dry power. Then Romick deftly moved into high-yield bonds prior to the asset class' 2009 rally. The fund can be a quirky moderate-allocation fund, but Romick has proved he can provide the upside while watching out for the downside.

Just because allocation funds can go anywhere doesn't mean they always will. Manager Chip Carlson, who's run  Greenspring (GRSPX) since 1987, sticks with smaller-cap value stocks and short-term, lower-quality corporate and busted convertible bonds. The asset mix has paid out a nice yield, which has served to smooth out the near-term bumps compared with other moderate-allocation offerings. The unique portfolio also has not been closely correlated with large-cap funds, making it an intriguing portfolio complement.

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Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.