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In fact, at the end of 2008 there was approximately $170 billion invested in balanced funds, according to a new report by Craig L. Israelsen, Ph.D. The report - titled - " A Better Balanced Benchmark ", has been issued alongside a new benchmarking methodology and investable product called the 7Twelve Balanced Portfolio. The report notes that the largest 10 balanced funds held nearly 80% of all the assets, and that the average 10-year performance of the 10 largest balanced funds from 1999-2008 was 3.74%, whereas the 7Twelve Balanced Portfolio generated a 10-year return of 6.97%. Balanced funds meet the requirements of a qualified default investment alternative (QDIA) under the provisions of the 2006 Pension Protection Act (PPA), as do so-called target-date offerings. In addition to their built-in "glidepath" (i.e., dynamic asset allocation model) a common attribute of target date funds is broad diversification across many asset classes. "News Flash" Balanced funds don't have a glidepath because their allocation stays at or near the 60/40 level over time, notes Israelsen, an Associate Professor at Brigham Young University, and a principal at Target Date Analytics LLC , a firm that has developed indexes for the benchmarking and evaluation of target date/lifecycle funds. However, the report notes that US stocks and US bonds have been the "mainstay ingredients" in balanced funds, with the typical ratio being a 60% allocation to large US stocks and a 40% allocation to bonds. "News flash...it's not 1959 anymore," the report notes, "today, there are multiple mainstream asset classes that should be considered when building a diversified balanced benchmark."
In fact, at the end of 2008 there was approximately $170 billion invested in balanced funds, according to a new report by Craig L. Israelsen, Ph.D. The report - titled - " A Better Balanced Benchmark ", has been issued alongside a new benchmarking methodology and investable product called the 7Twelve Balanced Portfolio.
The report notes that the largest 10 balanced funds held nearly 80% of all the assets, and that the average 10-year performance of the 10 largest balanced funds from 1999-2008 was 3.74%, whereas the 7Twelve Balanced Portfolio generated a 10-year return of 6.97%.
Balanced funds meet the requirements of a qualified default investment alternative (QDIA) under the provisions of the 2006 Pension Protection Act (PPA), as do so-called target-date offerings. In addition to their built-in "glidepath" (i.e., dynamic asset allocation model) a common attribute of target date funds is broad diversification across many asset classes.
"News Flash"
Balanced funds don't have a glidepath because their allocation stays at or near the 60/40 level over time, notes Israelsen, an Associate Professor at Brigham Young University, and a principal at Target Date Analytics LLC , a firm that has developed indexes for the benchmarking and evaluation of target date/lifecycle funds. However, the report notes that US stocks and US bonds have been the "mainstay ingredients" in balanced funds, with the typical ratio being a 60% allocation to large US stocks and a 40% allocation to bonds.
"News flash...it's not 1959 anymore," the report notes, "today, there are multiple mainstream asset classes that should be considered when building a diversified balanced benchmark."
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