In an article in Smart Money with this title, author Reshma Kapadia advocates “go anywhere” funds as a useful component for investor portfolios. The global asset allocation fund has become much more popular over the past couple of years, possibly for reasons of diversification, flexibility, and performance.
Financial advisers say the flexibility of these go-anywhere funds is even more important at a time when markets are contending with so much uncertainty. “These managers are in the trenches,” says John Eckel, a fee-only planner at Pinnacle Investment Management. “We don’t want to tie their hands.” In the wake of the credit crisis, advisers are reassessing how they diversify assets, increasingly opting to delegate the task to professional money managers, says Loren Fox, senior research analyst at Strategic Insight.
For many of the funds, flexibility seems to be linked to the ability to extract returns from multiple asset classes, particularly when domestic equities have offered such low returns over the last decade.
… global flexible funds, a proxy for managers with the most latitude, have handily outperformed Standard & Poor’s 500 index. These funds returned an average of 4.5 percent a year over the past five years, while the S&P 500 was essentially flat, according to research firm Lipper. The go-anywhere funds lost money during the crash but still held up much better than the broader market, a fact not lost on some planners.
Both of the Arrow Funds managed by Dorsey, Wright (DWTFX and DWAFX) fall into the global allocation category. Another fund mentioned in the article is Blackrock Global Allocation (MDLOX), which has grown to be an enormous $36 billion fund.
Blackrock goes at global allocation from a valuation standpoint, while the Dorsey, Wright managed funds take a relative strength approach. The two methods complement one another unbelievably well. Andy wrote an earlier post, “Global is the New Core,” showing an extraordinary efficient frontier with returns from Blackrock Global Allocation and our Global Macro strategy (separate account and DWTFX). To see this piece of financial pornography, click here. WARNING: ADULT CONTENT-seasoned financial professionals only!
If you are doing portfolio construction or asset allocation, this chart is hotter than Brooklyn Decker in the Sports Illustrated swimsuit issue. Blackrock Global Allocation is an enormous fund and probably some financial advisor out there could spend an entire quarter adding the Arrow DWA Tactical Fund (DWTFX) to all of his or her accounts that owned Blackrock. [ Not that we would advocate such a strategy. 
] The broader point is that investors are now open to considering a more flexible, more global approach than at any point in the past.
