The best global funds, also called world allocation funds, can be outstanding core holdings for a diversified portfolio because they are the only category of mutual funds that have a “go-anywhere” objective.
In just one global fund, you can hold the three primary asset types — stocks, bonds, and cash — but you’ll also have exposure to regions all over the world, as well as any capitalization size, sector and sub-category of stocks and any duration, credit quality or sub-category of bonds.
Of course the phrase “go anywhere” suggests an active management style and broad diversity of portfolio holdings, which can be a strength as the market becomes more volatile and uncertain every day.
With that said, to find the best global funds to buy now, we looked for well-managed funds with a solid performance history.
Here’s what we found:
Best Global Funds to Buy Now: American Funds Capital Income Builder Class A (CAIBX)
There’s a lot to like about American Funds Capital Income Builder Class A (CAIBX).
American Funds are excellent at using a team approach, where portfolios are separated into segments such as fixed income, domestic stocks, foreign stocks and so on. Therefore, American Funds get the best ideas that arise from each team’s strengths and investors get a total portfolio that is difficult to build without owning several different funds or hiring money managers.
American Funds Capital Income Builder recently had a stock allocation of roughly 40%. A little more than half of this stock allocation is in U.S. stocks, a third is in Europe and about 10% in Asia.
Not as globally invested as the stock allocation, the fixed income portion of the portfolio consists of more than 90% U.S. bonds with an average ‘BBB’ credit quality. This makes for decent yields without taking excessive risk. The yield for the CAIBX portfolio is an impressive 4.7%.
Compared to moderate target risk category funds, Capital Income Builder ranks in the top third or better in the one-, three-, five-, 10- and 15-year annualized returns. The fund also beat the S&P 500 Index in 2008, the worst calendar year for the last bear market.
CAIBX has a front-end load charge of 5.75% but some investors may qualify to buy load-waived shares. Expenses are a low 0.62% and the minimum initial purchase for the fund is only $250.
Best Global Funds to Buy Now: Oppenheimer Portfolio Series Active Allocation Fund Class A (OAAAX)
If you are looking for more growth than income, Oppenheimer Portfolio Series Active Allocation Fund Class A (OAAAX) is an outstanding global allocation fund choice.
The stock allocation is roughly 45% U.S. stocks and 30% foreign stocks and the top sectors are technology, consumer cyclicals, and healthcare. Top holdings include Apple Inc. (AAPL), Costco Wholesale Corporation (COST) and Gilead Sciences, Inc. (GILD).
Lead manager Caleb Wong has been at the helm of OAAAX for more than five years and has an excellent track record, as evidenced by the fund’s five-year returns that outrank 86% of moderate risk funds. The one- and three-year ranks are both in the top quartile.
With that said, the growth-oriented portfolio for OAAAX can lead to steeper declines than the average global allocation fund in bear markets. A long-term objective of at least five years is ideal for investing in this fund.
OAAAX has a front-end load charge of 5.75% but some investors may qualify to buy load-waived shares. Expenses are average at 1.19% and the minimum initial purchase for the fund is $1,000.
Best Global Funds to Buy Now: First Eagle Global Fund Class A (SGENX)
What makes First Eagle Global Fund Class A (SGENX) one of the best global funds is that it is a portfolio produced and managed by one of the best international investors in the mutual fund universe.
Although one of the co-managers resigned in October of 2014, longtime manager Matthew McLennan remains and First Eagle analyst team knows global securities inside and out. McLennan is also a manager of First Eagle Overseas Fund Class A (SGOVX), one of the best foreign stock funds in the market. SGOVX is closed to new investors, so the First Eagle Global fund is a good way to tap into McLennan’s knowledge and management skills.
Three-year returns have a 76th percentile rank but the one-, five-, 10- and 15-year ranks are all in the Top 10.
The portfolio is a blend of U.S. stock, foreign stock and cash, with almost zero bond exposure. This enables fund management to be patient and buy global equity values when they find them.
SGENX has a front-end load charge of 5% but some investors may qualify to buy load-waived shares. Expenses are below average at 1.11% and the minimum initial purchase for the fund is $2,500.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.
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