Best Asset Allocation Mutual Funds to Buy Now

Asset allocation mutual funds are a popular investment choice for individuals looking to achieve a balanced and diversified portfolio. These funds offer investors exposure to a mix of different asset classes, such as stocks, bonds, and cash equivalents, to minimize risk while maximizing returns. In this article, we will explore the key aspects of asset allocation mutual funds, including their industry, advantages, risks, and alternatives for investors.

Understanding Asset Allocation Mutual Funds 

Asset allocation mutual funds are designed to provide investors with a balanced mix of stocks, bonds, and other asset classes. The fund manager carefully selects and adjusts the allocation of these assets based on market conditions, economic indicators, and the fund's investment objectives. The primary goal is to achieve a balance between growth and stability, taking into account the investor's risk tolerance and investment horizon.

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Best Asset Allocation Funds to Buy as of 9/30/23

TheStreet Ratings' mutual fund rating model compiles and examines financial data on a monthly basis to gauge a mutual fund's risk-adjusted return compared to its competitors. These 20 asset allocation mutual funds are ranked highest by TheStreet Ratings' methodology.

Fund Name, Ticker, Overall Rating, (Risk Grade)

1. Caldwell and Orkin Gator Cap LngSh  (COAGX) - Get Free Report A+ (B)
2. Campbell Systematic Macro A  (EBSAX) - Get Free Report A+ (B)
3. Standpoint Multi-Asset Inst  (BLNDX) - Get Free Report A+ (B)
4. LS Opportunity Institutional  (LSOFX) - Get Free Report A+ (B+)
5. AlphaCentric Symmetry Strategy I  (SYMIX) - Get Free Report A+ (B)
6. Poplar Forest Cornerstone Inv  (IPFCX) - Get Free Report A+ (B-)
7. Pioneer Multi Asset Income Fund A  (PMAIX) - Get Free Report A+ (B+)
8. First Foundation Total Return A  (FBBAX) - Get Free Report A (C+)
9. Princeton Premium A  (PPFAX) - Get Free Report A (B+)
10. Redwood Sys Macro Trend SMT I  (RWSIX) - Get Free Report A- (B)
11. GMO Benchmark Free Allocation III  (GBMFX) - Get Free Report B+ (B+)
12. BlackRock Cmdty Strat Inv A  (BCSAX) - Get Free Report B+ (C+)
13. BlackRock Tactical Opptys Inv A  (PCBAX) - Get Free Report B+ (B+)
14. GMO Global Develope Eqty Alloc III  (GWOAX) - Get Free Report B+ (C+)
15. GMO Intl Developed Equity Alloc III  (GIOTX) - Get Free Report B+ (C+)
16. SEI Inst Inv Multi Asset Rl Rtn A  (SEIAX) - Get Free Report B+ (B)
17. Boston Partners Lg Sh Equity Inv  (BPLEX) - Get Free Report B+ (C)
18. Goldman Sachs Tact Tilt Ovrl P  (GSLPX) - Get Free Report B+ (B+)
19. GuidePath Tactical Alloc Svc  (GPTUX) - Get Free Report B (B)
20. GMO Global Eq Allocation III  (GMGEX) - Get Free Report B (C+)

Advantages of Investing in Asset Allocation Mutual Funds

• Diversification: Asset allocation funds offer built-in diversification by spreading investments across different asset classes. This diversification helps reduce the overall risk within a portfolio and enhances the potential for long-term returns.
• Simplified Investing: By investing in asset allocation funds, investors delegate the task of asset allocation and rebalancing to professional fund managers. This saves time and effort for individual investors who may lack the expertise or resources to manage a diversified portfolio themselves.
• Risk Management: The diversification provided by asset allocation funds helps mitigate the impact of market downturns on the overall portfolio. By spreading investments across different asset classes, the fund aims to cushion the impact of any underperforming investments.
• Professional Expertise: Asset allocation funds are managed by experienced professionals who continuously monitor market conditions and adjust the fund's asset mix accordingly. Their expertise helps navigate changing market dynamics and optimize investment returns.

Risks of Investing in Asset Allocation Mutual Funds

• Market Volatility: While asset allocation funds aim to mitigate risks, they are not immune to market volatility. Fluctuations in the value of underlying assets can impact the overall performance of the fund.
• Potential Underperformance: The performance of asset allocation funds depends on the allocation decisions made by the fund manager. If the manager's investment strategy or selection of assets proves ineffective, the fund may underperform its benchmark or other competing funds.
• Fees and Expenses: Like any mutual fund, asset allocation funds charge fees and expenses. These costs can reduce the overall returns generated by the fund, especially if the fund's performance does not outpace its fees over the long term.
• Limited Customization: Asset allocation funds follow a predetermined asset allocation strategy, which may not align perfectly with the individual investment preferences or risk appetite of every investor. Investors seeking greater customization may prefer other investment options.

Alternatives to Investing in Asset Allocation Mutual Funds

Investors have a few alternatives to asset allocation mutual funds. One option is to invest in big-name funds such as Fidelity, T. Rowe Price, or Vanguard. These companies have a strong reputation for delivering consistent returns and providing investors with a range of fund options to choose from.

Another option is to invest in large-cap, small-cap, or value funds. Large-cap funds invest in established, well-known companies with a market capitalization of more than $10 billion. Small-cap funds, on the other hand, invest in smaller, lesser-known companies with a market capitalization of less than $2 billion. Value funds focus on undervalued companies that are priced below their intrinsic value, with the expectation that their share prices will eventually rise. These funds can be a good alternative for investors who want to focus on a specific type of company or investment style.

The Bottom Line

Asset allocation mutual funds offer investors a diversified mix of stocks, bonds, and other asset classes, managed by professionals who adjust the allocation based on market conditions and investment objectives. They provide built-in diversification, simplify investing, mitigate risk, and offer professional expertise. However, they are not immune to market volatility, may underperform, charge fees and expenses, and offer limited customization. Investors have alternatives such as investing in big-name funds or specific types of funds such as large-cap, small-cap, or value funds.

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