Topic: How To Invest

Q: Pat: Just wondering what you think of the Fidelity Income Allocation Fund. Would it make a good investment? Thank you.

Article Excerpt

A: We have moved away from recommending mutual funds in favour of lower-fee exchange-traded funds (ETFs). However, the best mutual funds are okay to hold if you already own them. The Fidelity Income Allocation Fund is a tactical asset allocation fund. As such, it shifts its portfolio allocations between stocks, bonds and cash in order to benefit from investment opportunities as they arise. For example, if the fund’s managers feel the bond market is depressed and poised for an upswing, then they may overweight the portfolio in fixed income for a few months. The Fidelity Income Allocation Fund is currently 24% in stocks, 66% in bonds and 10% in cash. We think that asset allocation is vastly overrated as an investment tool. It rose to prominence because the investment industry seized upon some academic research and turned it into a sales pitch for investment products with much higher fees than so-called “plain vanilla” stocks and bonds. As well, we think that bonds are unlikely…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.