Balanced Funds Hard To Sustain

Lower bond yields and stock market volatility could prompt balanced fund investors to consider alternative investment strategies, says a BMO Global Asset Management white paper. ‘Finding a new balance with alternatives’ suggests the current state of the stock market will make it difficult to sustain the strong historical returns of a balanced portfolio, whether it leans to the more conservative or moderate side. For example, a moderate risk portfolio, which produced a return of 9.6 per cent between 1981 and 2015, is expected to produce a return of 4.5 per cent over the next 10 years. Kristina Kalebich, senior alternatives specialist and co-portfolio manager with BMOGAM, says “A good alternative option should either give the portfolio a higher return for the same amount of risk or the same return for a lower amount of risk.”