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The pros and cons of opting for a 60/40 balanced portfolio strategy


Blake Wolfe
While the typical balanced fund is becoming a rarity among pension plans, a segment of plan sponsors continue to utilize these funds albeit with added diversification.
Traditionally, such funds have invested 60 per cent in equities and 40 per cent in bonds. But with investment options for pension plans expanding over the last 20 years, institutional investors have become more sophisticated, looking beyond the balanced fund to diversify their asset classes and increase returns, says Erwan Pirou, chief investment officer for retirement solutions in Canada at Aon.
“The problem [with balanced funds] is you miss out on the risk of alternatives, which can give you a good diversification and protect you from equity risk to a certain extent. Most balanced funds tend to be heavy on equity risk, because it’s the only lever they use to add value.” ....

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S&P/TSX composite slips despite energy sector jump; U.S. markets mixed


Only two sectors were positive on the day, with energy gaining more than four per cent and materials up 0.56 per cent, while information technology followed U.S. tech stocks lower, the worst performer in Toronto with a loss of 1.76 per cent.
The May crude oil contract jumped US$2.97 to US$63.15 per barrel after the International Energy Agency raised its forecast for oil demand this year by 230,000 barrels per day to 96.7 million barrels.
A separate U.S. government report also showed that the amount of oil supplies in inventory fell sharply last week. Meanwhile, the May natural gas contract was unchanged at US$2.62 per mmBTU. ....

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