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I purchased a couple of "world allocation" (aka "Go Anywhere") mutual funds. When I plugged one of them (FAIRX) into Morningstar and it showed up as a "large blend" fund. So I figured I could categorize it as a large cap fund in a asset allocation breakdown (eg. 50% large cap, 20% small cap, 20% foreign, 10% bond). Since FAIRX is not truly a large cap fund and has a relatively high turnover, how should I categorize it in my asset allocation breakdown? Or is selling it the only way to conform to the breakdown?

As this article explains, "world allocation" fund managers have great freedom to dynamically spread their investments throughout different parts of the world and among various asset classes like stocks, bonds, and commodities at any given time.

  • Forgot the guy's name, but wasn't there a topshot fund manager who invested heavily in China, in 2010-2011, and is loosing heavily. Spreading wide isn't also that easy a game. Yet to see a fund manager who is good in all cases. – DumbCoder Sep 7 '11 at 11:52
  • You're going to have to do more homework than using Morningstar boxes to ensure that you are diversified properly. – duffbeer703 Sep 7 '11 at 16:13
  • @duffbeer703 Like it or not, Morningstar style boxes are an industry standard, so not sure where you're going with that comment. Question seems pretty reasonable to me. And style boxes are, IMHO, an excellent start and major improvement towards achieving proper diversification for the vast majority of investors. – Tal Fishman Sep 7 '11 at 16:33
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The intent behind your question defeats the purpose of investing in this fund. The point of "go anywhere" funds is to get away from Morningstar style boxes. You should not even seek to categorize this fund in your asset allocation. Rather, if you tend to make your investment decisions based on the relatively narrowly defined Morningstar style boxes, you should not invest in this fund. This particular fund seems like the only appropriate category for it would be "equity", so if you tend to make an asset allocation decision between fixed income and equity, you could at least continue to use this fund as part of that allocation.

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