Asset Allocation Comeback

Sticking with a long-range fund strategy will be critical in today's investing environment

questions, going over the basics such as the difference between a bull and a bear market,” says Schneller. “He told the people attending the seminar not to expect a quick turnover at a large profit and not to invest your rent money, which made a lot of sense.”

Mutual funds are ideal for new investors because they provide diversified holdings, professional management, and access to one’s money, if needed. Schneller began investing in Ariel Fund last year and has stayed with it so far, even though she admits to being nervous about the market’s volatility. “My 9-year-old son, who has taken a stock market course, invests some money in this fund, too,” Schneller adds. “I think everyone should know about investing; it’s never too soon to start learning.”

Now she is looking to diversify her portfolio and to invest in three or more mutual funds over the next couple of years. According to financial experts, you should try to allocate your asset mix among five or more different mutual fund categories (e.g., domestic equity, foreign, bond, large growth, small growth, large value, and small value).

Ariel’s money managers are value investors who look for companies with stocks trading at prices that are modest, in relation to their cash flow. Is McKissack concerned that value funds are trailing growth funds yet again? “We’re patient,” he says. “Value stocks are about even with growth stocks over the past 20 years. So, the events of last spring were a watershed, marking the end of outrageous valuations in technology stocks. As such excesses are shaken out of the market, more attention may be paid to stocks selling at reasonable prices.”

Value stocks may be ready to leapfrog to the top or growth stocks may continue to lead for many years to come. The bottom line: by hedging your bets with a well-diversified mutual fund portfolio, you can make sure that at least some of your money is in the right place at the right time, wherever that place might be.

B.E.’s TOP MUTUAL FUND PERFORMERS

FUND NAME

TICKER

Y-T-D
TOTAL RETURN*

AVG. ANNUALIZED TOTAL
RETURN 3-YEAR

AVG. ANNUALIZED TOTAL
RETURN 5-YEAR

PHONE

MIN. INIT. INVEST.

ASSETS*
(in millions)

Large Growth
American Eagle Capital App - 86.70 - - 800-335-0333 1000 10.6
American Eagle Twenty - 68.60 - - 800-335-0333 1000 8.0
StockJungle.com Intelligence SJCIX 32.39 - - 800-945-4957 500 3.4
American Capital Exchange ACEHX 30.25 25.11 26.36 713-993-0500 Closed 114.6
Berkshire Focus BFOCX 30.10 - - 877-526-0707 5000 98.3  
Mid-Cap Growth
Pin Oak Aggressive Stock POGSX 33.60 58.36 38.26 888-462-5386 2000 476.3
Vanguard Capital Opportunity
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