LIPPER AWARDS-Where 'go anywhere' funds are heading now

Fri Mar 21, 2014 12:01am EDT
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(The author is a Reuters contributor. The opinions expressed are his own.)

By Lewis Braham

PITTSBURGH, March 21 (Reuters) - Freedom for money managers is a double-edged sword. Nothing highlights an active manager's skill, or lack thereof, like flexibility. If you can buy any stock or bond, your opportunities to soar above your peers or crash and burn increase dramatically.

The Lipper 2014 U.S. Fund Awards for the "mixed-asset" and "flexible portfolio" categories highlight the abilities of the best go-anywhere managers. They must not only outperform on returns but also assume the same or less risk than their peers. Lipper is a unit of Thomson Reuters Corp .

Since the funds are so flexible, figuring out where they belong in your portfolio can be tricky. Are they bond substitutes, equity substitutes, or a little bit of both? It's hard to say, because strategies vary tremendously.

At Villere Balanced, a winner in the Mixed-Asset Target Allocation Growth category, co-managers George Young and Lamar Villere employ a bottom-up, kick-the-tires approach, seeking stocks and bonds of undiscovered, often small, companies.

Meanwhile, Kandarp Acharya, co-manager of Wells Fargo Advantage Index Asset Allocation and winner in the Mixed-Asset Target Allocation Moderate category, uses a more top-down, macro approach to determine how to allocate to indexes of large-cap stocks and Treasury bonds.

The Wells Fargo fund is up an annualized 17.7 percent during the past five years through March 19, besting 97 percent of its peers. Villere Balanced is up an annualized 22.7 percent for the same period, outperforming 99 percent of its peers.