Oct 15, 2013|
Flynn Murphy, Morningstar
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Our guest -- -- for Morningstar has identified two balanced near mutual funds that he wants to talk to us about. Good morning -- -- Morning very pretty good I've always used these types of funds as my default mechanism you know when you're at a cocktail party and somebody says -- nine and immediately -- -- -- investment advice right. Balanced mutual funds have always felt like that is they get my safety net if you will. We explain what the what we do you like to the American funds down American -- what you like that. Well I think balance on our great. Sort of and initial one stop shop for the average investor be kicking needs and stock exposure you need some bond exposure. And out -- Nixon together you mentioned 6040 portfolio which is pretty typical. The American find. Is a little bit more on. Assertive a little bit more aggressive it has about it 70% in stocks. And only about 30% bonds and so this. It it's not going to be as volatile as just hanging on to -- basketball stocks but it won't be a little bit more volatile than traditional 6040. Fund. However over time. -- we -- for investors are gonna hold onto these in an IRA or retirement account for 102030. Years that actually tend to to benefit in the long run. So when you look at a fund like this say over twenty year period timer you mentioned thirty years how many years over thirty years would lose money. Because that's I think it would makes people feel good about balanced funds is they don't lose money very often. Yet I think that. I guess it's hard to say going forward that this fund has. -- etiquette given investors any plenty of reason to sleep well at night on in it in its past and that's partly due owing to the fact the world -- -- percent of its. Portfolio isn't stocks it tends to hold people who chips stocks were very competitive advantages and long term. Durability was in the -- within their industry which is mercker PepsiCo or Union Pacific. -- it in Willits holds some international toxic and be well known names such as Royal Dutch Shell so this that this is a fun -- down. Italy eat -- value decline in 2008. However. Or. It doesn't lose money very often it is actually if I put a gun to your head and I said okay. You only by the American fund's balance -- you can only buy the vanguard tax managed fund disaster second -- -- which which which one and what's to. Well make it -- I -- I know it's just let's send. I think if you're a long term investor looking ten plus years down the road the American funds. Balance -- user choice I think it's here. A little bit more short term. You know if you might have used for the money in the investment fund in the next ten years vanguard fund. The vanguard tax managed balance makes a lot of sense. Deal okay all right well thank you -- I appreciate your time in your explanation appreciate it. That's when Murphy to funds American balanced fund AB AL acts vanguard tax managed balance BT and FX.