Top Performer Conservative Allocation Mutual Funds 2011


Top Performer Conservative Allocation Mutual Funds 2011
Top Performer Balanced Fund
Investing can be done through various vehicles such as individual stocks and/or bonds, mutual funds, exchange traded funds (ETF), closed-end funds (CEF). One of the most well known investment types is mutual fund. Mutual fund investment can provide an instant portfolio diversification hence the fund usually invests in more than 10 stocks or bonds. Several things need to consider before investing in mutual fund include:
  • The fund’s expense ratio, sales charge and other fees
  • The fund’s age, size, and portfolio manager
  • Fund’s performance over long term and short period (though past performance doesn’t guarantee future performance)
  • Fund’s volatility and risk
  • Other related changes to fund investment style or management
  • Fund’s distribution that contribute to your tax bill
Balanced mutual fund or hybrid fund is one of the most popular mutual fund classes. These balanced funds can be classified into several categories such as conservative allocation, moderate allocation and world allocation. A Balanced fund is a mutual fund which invests in common stock, bonds, convertible and preferred stock. It usually has an objective of income provision and some capital appreciation with low risk. Why invest in balanced funds? Reasons are:
  • The fund can provide instant portfolio diversification or one stop shop for many investment vehicles like stock, bond, preferred, convertible, etc.
  • This fund can reduce volatility considerably since it is less aggressive than equity-only fund
  • It can provide limited capital appreciation through investment in stock and regular income from bond portion
The following list is the top performer conservative allocation balanced fund in May 2011 (up to May 17th, 2011). This type of fund is ideal for conservative investor, near retirement or retired investors. This type of fund usually invests about 30-50% of asset in stock and 50%-70% of asset in fixed income (bond). More details about the asset allocation below. You can also check the fund long term and short term performance below. You can also find my new article about best performing no load conservative allocation funds.

Top Performer Conservative Allocation Balanced Mutual Funds May 2011:
  1. SunAmerica 2020 High Watermark A
  2. Natixis Income Diversified A
  3. Catalyst/SMH Total Return Income A
  4. Fifth Third Strategic Inc A
  5. API Efficient Frontier Income A
  6. Permanent Portfolio
  7. WHG Income Opportunity A
  8. IMS Strategic Income
  9. Thrivent Diversified Income Plus A
  10. MFS Diversified Income A

NoFund DescriptionTickerYieldMorningstar RatingNet Assets (Mil)Expense RatioMin to Invest
1SunAmerica 2020 High Watermark AHWKAX2.00%1$62 1.53%$500
2Natixis Income Diversified AIIDPX2.91%2$67 1.19%$10,000
3Catalyst/SMH Total Return Income ATRIFX4.16%N/A$96 1.55%$2,500
4Fifth Third Strategic Inc AFFSAX4.71%3$159 1.12%$1,000
5API Efficient Frontier Income AAPIUX7.05%4$103 1.71%$1,000
updated on May 17, 2011

1. SunAmerica 2020 High Watermark A (Ticker: HWKAX)

SunAmerica 2020 High Watermark investment seeks for capital appreciation and capital preservation. It also has a secondary objective for high total return. The net assets of this fund are invested in U.S. equity markets and U.S. fixed-income markets. 

This HWKAX has 62.2 million of net assets. The annual expense ratio of this fund, 1.53%, is higher than the average expense, 0.86%. The last dividend was distributed in December 2009; this contributes to a yield of 2%. This fund has returned 0.73% over the past one year and -5.73% over the past 3 years. It has experienced 4 years with positive return and 2 years with negative return. The best return was recorded in 2006 with 10.10%. 

This fund applies 12b1 fee of 0.35% and front-end sales load of 5.75%. This fund is managed by Juan M. Ocampo since February 2005. The minimum balance required to invest in this fund is $500 for brokerage account with $100 minimum subsequent investment. While for IRA account, the initial investment is $250 with minimum subsequent investment as much as $25. The other class of this fund is SunAmerica 2015 High Watermark A Class (Ticker: HWFAX) and C class (Ticker: HWFCX).

This fund can be purchased from 70 brokerages include JP Morgan, DATALynx, Fidelity Institutional Funds Network, Merrill Lynch, Scottrade Load, E Trade Financial, Raymond Jones, etc. 

2. Natixis Income Diversified A (Ticker: IIDPX)

The investment in Natixis Income Diversified fund is seeking for current income as well as capital appreciation. It prefers to invest the assets in income producing fixed-income and equity securities. This fund is specially designed to offer a diversified portfolio access to investors. The portfolio has a complementary income producing investment disciplines from specialized money managers through investment in a single mutual fund. 
Natixis Income Diversified A
Natixis Income Diversified fund 

Kevin H. Maeda has managed this fund since its inception in November 2005. The expense ratio is 1.19% per year. This expense figure is a little bit higher than the average in the Conservative Allocation category which is only 0.86%. Minimum balance requires to open a brokerage account in this fund is $10,000. The same amount applies for IRA account, with a $100 of minimum subsequent investment. Please note that there is a 0.25% 12b1 fee applies and 4.50% of front-end sales load fee. 

This best balanced fund has a 4-stars rating from morning star. The best 1-year total return was recorded in 2009 with 33.32%. It has returned 9.94% over the past one year and 5.12% over the past five years. 

IIDPX fund can be purchased from 80 brokerages include Raymond James, Firstrade, JP Morgan, TD Ameritrade Institutional Services, Merrill Lynch, Scottrade Load, Pershing FundCenter, Schwab Institutional Only, Morgan Stanley Brokerage Accounts, etc. The other class of this fund is Natixis Income Diversified C (Ticker: CIDPX). 

The annual holdings turnover of this fund as per May 2011 is 28.00% (compared to the average 58.23%). The top ten holdings as of March 2011 are Simon Property Group Inc, Equity Residential, U.S. Treasury Inflation Indexed Bond 3.375%, UAL Pass Through Trust, Boston Properties Inc, AvalonBay Communities Inc, U.S. Treasury Inflation Indexed Note 1.625%,  Public Storage, Vornado Realty Trust and Toys R Us Inc. 

3. Catalyst/SMH Total Return Income A (Ticker: TRIFX)

The investment in Catalyst/SMH Total Return Income Funds is seeking for total return by investing in a broad range of income-producing securities such as equity securities and debt securities. There are at least 30% of the assets invested in equity securities, with up to 20% in foreign companies and non-U.S. issuers. The fund may invest without limitation in lower quality, higher yielding debt securities. 

Catalyst/SMH Total Return Income A
Catalyst / SMH Total Return Income
Dwayne A. Moyers is the lead manager of this Catalyst fund. He has managed this fund since its inception in May 2008. The minimum balance to invest in this fund for brokerage or IRA account is $2,500 with $50 minimum subsequent investment. The 12b1 fee of this fund is 0.25% and 5.75% of front-end sales load fee. The annual expense ratio of this fund is 1.55%. 

TRIFX has not yet gotten any rank from morning star, but it has a 6.0% of year-to-date return. The total return in the previous years is 45.76% in 2009 and 20.51% in 2010. It has returned 8.61% over the past one year. The other class of this fund is Catalyst Total Return Income C (Ticker: TRICX). 

This fund can be purchased from 35 brokerages, include JP Morgan, Scottrade Load, Schwab Retail, Bear Stearns, Raymond James, TD Ameritrade Retail NTF, Wells Fargo Advisors MF Advisory, etc. 

The top 10 equity holdings of this fund represent 24.9% of total portfolio, consists of Cellcom Israel Ltd (3.7%), Ares Capital Corp (2.9%), Conoco Phillips (2.7%), Apple Inc (2.7%), Common Wealth REIT (2.6%), Marvell Technology Group Ltd (2.4%), Chevron Corp (2.0%), American Capital Ltd (2.0%), Chesapeake Energy Corp (2.0%) and Exxon Mobil Corp (1.9%). 

4. Fifth Third Strategic Income A (Ticker: FFSAX)

Fifth Third Strategic Income fund objective is to provide a high level of income consistent with reasonable risk. The fund also tries to provide capital appreciation as a secondary objective. Income-producing securities are the most favorable investing medium for this fund. Majority of assets (>80%) are invested in debt securities, preferred stocks, common stocks, common shares and preferred shares of closed-end investment companies. The fund does not invest more than 20% of its portfolio in fixed income securities with BB rating or lower (i.e. junk bonds). 

Fifth Third Strategic Income A
Fifth Third Strategic Income
Peter Kwiatkowski has managed this top performer balanced fund since February 2005. The fund was introduced on April 2004. It distributes 4.71% per year dividend. The minimum initial investment of this fund is $1,000 for brokerage account and $500 for IRA account. Both accounts require a minimum of $50 for the subsequent investment. This fund applies 0.25% 12b1 fee and 5.0% frond-end sales-load fee. It has 1.12% annual expense ratio. The other class of this fund are Class B (Ticker: FFSBX), Class C (FRACX) and Institutional Class (Ticker: MXIIX). 

The performance of this fund is as below: 
  • 1-year: 6.06%
  • 3-year: 6.22%
  • 5-year: 4.75%
  • 10-year: 5.73% 
The fund has a year-to-date return of 5.32% with 5-year average return of 5.83%. The best 1-year total return among the 4 years of positive return was in 2009 with 36.58%. The worst was experienced in 2008 with -20.90%. 

This FFSAX fund can be purchased from 56 brokerages, such as Vanguard, Scottrade Load, JP Morgan, TD Ameritrade Institutional Services, E Trade Financial, Bear Stearns, Firstrade, Raymond James, Fidelity Retail Funds Network, etc. 

As of April 2011, the top ten holdings of this Fifth Third fund are iShares S&P US Preferred Stock, Fifth Third Instl, Ishares Barclays Aggregate Bond, New Zealand (Govt), Poland Government Bond, Lloyds Banking Group PLC, Legg Mason Inc, Southern Cal Ed, Apache Corp and Citigroup Capital VII. 

5. API Efficient Frontier Income A (Ticker: APIUX)

The investment in API Efficient Frontier Income fund is seeking for current income with limited credit risk. The net asset is normally invested in derivatives, securities and other financial instruments that offer the current income opportunity with limited credit risk. It may invest in debt securities, including U.S. government securities and corporate bonds. As well as common stock of U.S. and foreign issuers and in other U.S. and foreign securities issued by underlying funds, index securities, REIT and others.

This API fund has been managed by David D. Basten since July 1997. This fund also has a high dividend of 7.05%. The minimum balance required to open a brokerage account in this fund is $1,000. There is no IRA account available. The fund has annual expense ratio of 1.71%. The 12b1 fee of this fund is 0.75%, and front-end sales-load fee of 5.75%. 

API Efficient Frontier Income A
API Efficient Frontier Income
This conservative allocation fund has a four star rating from Morning star. It has recorded 9 years positive performance with the best total return in 2009 with 54.27% and the worst in 2008 with -17.76%. It has returned 5.16% over the past decade and 8.81% over the past five years. The other class of this fund are Class C (Ticker: AFFIX) and Institutional Class (Ticker: APIIX). 

APIUX can be purchased from 45 brokerages such as Wells Fargo Advisors MF Advisory, JP Morgan, Td Ameritrade Inc, Schwab Retail, ETrade NLF, Fidelity Retail FundsNetwork, TD Ameritrade Institutional, etc. 

The top 10 holdings of this fund are Spdr Barclays Capital high Yield Bd ETF (4.908%), Ishares Iboxx $ High Yield Corp Bond Fd (3.909%), Annaly Mortgage Management Inc (3.359%), Money Market (2.786%), Invesco Mortgage Capital (2.412%), Powershares High Yield Corp Bd Portfolio (2.316%), MFA Financial Inc (2.235%), Chimera Investment Corporation (1.637%), Ishares Dow Jones Select Dividend Index Fund (1.477%) and Powershares Exchange Traded Fd Tr High Yield Equity (1.436%).

Disclosure: No Position

More funds on part 2 article.


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