Forward Management has made improvements to their asset allocation funds, changing the suite to help investors, according to a company news release.
The five funds have been renamed the Forward Global Asset Allocation Series. It includes funds with various growth and income objectives.
Additionally, Forward has globalized the mix of mutual funds to increase diversification and shifted the basis for weighting from market capitalization to GDP.
For more information, read the news release below.
Company Press Release
FORWARD UPDATES AND GLOBALIZES ITS SERIES OF ASSET ALLOCATION FUNDS
Adds GDP weighting, more alternative strategies in underlying funds
San Francisco, November 5, 2012 – Forward (Forward Management, LLC) (www.forwardinvesting.com) has
enhanced its suite of asset allocation funds, adapting them to help investors meet the challenges of
an era where we have not only historically low yields combined with elevated risk levels, but also
generally lower returns.The funds have been renamed the Forward Global Asset Allocation Series.
The series comprises five mutual funds with varying growth and income objectives. It is designed to
provide bank trust departments and other financial advisors with a core portfolio solution that can
be tailored to individual client needs. The five funds include: Forward Growth Fund, Forward Growth
& Income Fund, Forward Income Builder Fund, Forward Balanced Fund and Forward Income & Growth Fund.
“Over the past six years Forward has developed a wide array of non-traditional and global
strategies, giving us the components for an asset allocation solution that’s in sync with today’s
realities,” said Alan Reid, CEO of Forward. “These are not your father’s asset allocation funds.”
While generally preserving the configuration of its previous asset allocation suite, Forward has
reduced the number of portfolios from six to five, pulling the Aggressive Growth portfolio from the
series. That fund will be renamed the Forward Multi-Strategy Fund, although its objective is
Forward has also updated the portfolio series by:
- Globalizing the mix of underlying Forward mutual funds for greater diversification and more
exposure to global growth and income opportunities. With few exceptions, the underlying funds will
operate with a global or international strategy.
“While developing nations are generally faster-growing and more fiscally stable than developed
countries, studies show that most investor portfolios are significantly underweight in their
exposure to emerging and frontier nations,” said Nathan J. Rowader, Forward’s Director of
Investments and lead Portfolio Manager for the asset allocation fund suite. “This is why
globalization was one of our prime objectives in updating our asset allocation funds.”
- Shifting the basis for global portfolio weightings from market capitalization to Gross Domestic
Product (GDP). Market-cap weightings skew portfolios toward developed economies with established
capital markets while underweighting faster growing, less developed markets such as China and
Brazil, said Rowader. For example, as of December 31, 2011, U.S. stocks represented a 39.3%
weighting on a market-cap basis vs. 25.3% on a GDP-weighted basis. Emerging markets, on the other
hand, had a 20.9% market-cap weighting vs. a 27.6% GDP weighting. Consistent with the shift to GDP
weighting of portfolios, Forward has changed the fund series’ portfolio benchmarks to global indexes
that are also GDP-weighted.*
- Increasing their slant toward alternative strategies and real assets, with the aim of better
managing downside and correlation risks as well as adding growth and income potential. The
portfolios in the suite draw on underlying Forward mutual funds asset classes including emerging
markets corporate debt, international dividend, emerging markets preferred dividend, long/short
commodities, managed futures, and frontier markets, among others.
- Systematically adapting fund allocations to changing global conditions. Departing from a
traditional “set-it-and-forget-it” approach, the asset allocation team monthly adjusts the mix of
underlying strategies in each portfolio, utilizing a statistical allocation process and
state-of-the-art techniques for return and volatility forecasting.
- Putting more focus on volatility management. Forward factors the volatility of each underlying
fund’s benchmark into its monthly portfolio rebalancing process. The investment team seeks to limit
each portfolio’s volatility to some percentage of the benchmark’s volatility, depending on the
risk/reward profile for which the portfolio is designed.
While the Forward Income Builder Fund remains part of Forward’s asset allocation series, it will
also be available as a stand-alone product on intermediary and institutional platforms. Designed to
address the current low-yield climate, Forward Income Builder Fund looks beyond traditional income
sources to opportunities that investors might not typically consider, such as international real
estate, global infrastructure and high-yield emerging markets debt.
“We believe asset allocation funds are more relevant than ever, as they provide a level of
diversification, adaptability and risk management that are very difficult for investors to achieve
on their own. But fund managers need to keep evolving them to fit the specific challenges and
opportunities of the times,” said Reid. “With this new version of our asset allocation series,
Forward is striving to be on the forefront of that evolution.”