It's the PMs' Way or the Highway
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an InvestmentWires' Publication
Tuesday, September 27, 2011

It's the PMs' Way or the Highway

Fund managers are currently betting on equities, whether their investors like it or not, the Wall Street Journal reports.

In fact, stocks represented 55 percent of the average allocation fund at the end of August, up almost five percentage points from the start of the year and up from 41 percent at the end of 2009, according to the latest data from Morningstar. On the flip side, mutual-fund investors pulled an estimated $45 billion out of equity funds from August through mid-September.

So what's driving the disconnect between PMs and their constituents? According to the article, PMs say they aren't beholden to investor sentiment -- even if the investors in question are fund shareholders.

"People tend to look at five- and 10-year returns," Ed Perks, PM of the $58 billion Franklin Income Fund[see profile], which has raised its stock allocation to 35 percent from 27 percent in 2009. "We're trying to evaluate what returns will be over the next five and 10 years."

Other funds that have made significant moves towards equities include: The $75 billion American Funds Capital Income Builder's[see profile]; the $10.8 billion T. Rowe Price Capital Appreciation Fund[see profile] and the $1.1 billion Templeton Global Balanced Fund.

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