Put balance in investments

Andrew Leckey

August 28, 1991|By Andrew Leckey | Andrew Leckey,Tribune Media Services

It may be time to put a little balance in your investing.

Balanced funds, which combine stocks and bonds in one portfolio, have attracted $1 billion in investor dollars this year. They don't have the punch of either stock or bond funds at peak performance, but they're less volatile, smoothing out the bumps on the way to solid gains.

Over the past decade, balanced funds have averaged a surprisingly strong 14.67 percent annual gain, according to the Mutual Fund Values investment advisory. That compares to 13.32 percent for stock funds and 12.66 percent for bond funds.

"The strength of a balanced fund such as ours is that it has paid a dividend for years, is conservatively run and has low volatility," explained G. Kenneth Heebner, portfolio manager of CGM Mutual Fund, up 25.46 percent this year.

It is, however, somewhat tougher to figure out the philosophy behind these funds than it would be for an individual stock or bond fund. Not only do the stocks and bonds change, but so does overall investment mix.

"We're currently at our highest level of equities in years -- 69 percent of the portfolio -- because we believe interest rates are coming down and corporate earnings will be up," said Gordon Wilson, portfolio manager of Kemper Total Return Fund, up 23.14 percent.

You can, of course, simply buy individual stock and bond funds, shifting around to change the mix yourself. But that's not everyone's cup of tea.

For example, all of CGM Mutual Fund's bonds, comprising 38 percent of the overall portfolio, are currently long-term government securities. Its stock portfolio features large holdings in Phillip Morris Cos. due in part to the success of its Kraft acquisition; well-managed banks such as Bankers Trust, J.P. Morgan and Mellon Bank Corp. because their price is right; Syntex Corp. because it has two good drug products coming up; and K mart because it's turning its business around and closing the gap between it and Wal-Mart Stores.

Top balanced funds in 1991, according to Mutual Fund Values, are:

Merrill Lynch Phoenix B Fund, New York, $213 million in assets (currently 80 percent stocks, 15 percent bonds and 5 percent cash), initial sales charge of 4 percent declining a percentage point each year, $1,000 minimum initial investment, up 36.10 percent.

CGM Mutual Fund, Boston, $351 million assets (currently 62 percent stocks and 38 percent bonds), no load, $1,000 minimum, up 25.46 percent.

Kemper Total Return Fund, Chicago, $942 million assets (currently 69 percent stocks, 20 percent bonds and 11 percent cash), 5.75 percent load, $1,000 minimum, up 23.14 percent.

Kemper Investment Portfolios Total Return Fund, Chicago, $579 million assets (currently 70 percent stocks, 20 percent bonds and 10 percent cash), initial sales charge of 3 percent declining to 2 percent in the third and fourth years and 1 percent in the fifth and sixth years, $250 minimum, up 22.33 percent.

Twentieth Century Balanced Investors Fund, Kansas City, Mo., $170 million assets (a set amount prescribed as 60 percent stocks and 40 percent bonds), no load, no minimum initial investment, up 21.59 percent.

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