Our Recent Posts

Archive

Tags

What is a Balanced Fund?


When the media is reporting what has happened to managed funds operated by different fund managers, they generally measure performance against the “balanced” fund of the manager under scrutiny. When a comparison is made of the relative performance of Company A’s balanced fund and Company B’s (or even the “average” balanced fund) I am reminded that the bloke who has one foot in a bucket of ice and the other in a bucket of boiling water is comfortable ON AVERAGE.

If my balanced fund has 50% in small cap shares and 50% in company debentures paying 12% interest nobody could use the English language to describe it as anything but a balanced fund. Such a description would be just as useful, that is not useful at all, in understanding how it mirrored someone else’s balanced fund that had 20% each of foreign shares, Australian shares, Australian bonds, UK gilts and an Australian property trust.

Next time you think of getting balance, especially in your superannuation fund, please ensure that its performance cannot be appropriately judged against someone else’s balanced fund.