Fidelity's asset allocation funds seek a range of investment goals

November 08, 1992|By Werner Renberg | Werner Renberg,Contributing Writer

One of your most important investment decisions allocating money among cash equivalents, bonds, and stocks.

Just how you should allocate your assets depends on your investment objectives and tolerance for risk.

For example, when you're younger and expect to be invested for many years -- while markets fluctuate but your pay goes up -- you may be able to afford higher risks while shooting for higher returns.

To accommodate people with different risk/return targets, Fidelity has created three no-load asset allocation funds with different investment objectives: Fidelity Asset Manager, started in December 1988 to seek high total return with reduced risk; Fidelity Asset Manager: Growth, started last December to seek high total return more aggressively, and Fidelity Asset Manager: Income, launched last month, to generate income.

Portfolio manager Robert A. Beckwitt has posted an impressive record.

In the three years ended Sept. 30, Fidelity Asset Manager had an average annual total return of 12.6 percent, well ahead of the 9.7 percent for the Standard & Poor's 500 Index -- with only one-half of the index's volatility, according to CDA Investment Technologies.

In the first 10 months of 1992, while the stock market barely rose, Asset Manager's return exceeded 8 percent, and the Growth fund was up almost 13 percent.

"When a sector does well," he says, "we'll be in there." And he has been -- whether Ford stock, Mexican Treasury bills, or junk bonds.

The funds' basic elements:

* Broad ranges for allocations among bonds, stocks and short-term instruments -- those with maturities of up to three years, not only money market paper that's equivalent to cash.

* A neutral mix, defined as the desired asset allocation for periods when Fidelity projects the relative returns of the three classes to equal their expected long-term returns.

For the original Fidelity Asset Manager, for example, the limits are 0 to 70 percent for short-term instruments, 20 to 60 percent for bonds; and 10 to 60 percent for stocks. Its neutral mix is 20-40-40.

All three may own some of the same stocks, but their mixes differ. Beckwitt changes allocations by analyzing whether stocks bonds appear to be the better buys, whether the Federal Reserve is making money easier or tighter, and whether investors are edgy or optimistic.

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