6 Global Balanced Funds That Make Sense for This Market

Japanese real estate company Mitsubishi Estate is seeing increased pricing power for rentals and sales. Above: apartments in Ichikawa, east of Tokyo. (PHILIP FONG/AFP via Getty Images)

Foreign stocks are beating U.S. ones this year. But many investors are still struggling over where—and how much—to invest outside the U.S.

One could hire a financial advisor to answer these questions, but that adds an extra layer of advisory fees. The simplest solution for many retail investors is to buy an all-in-one global balanced fund that makes the allocation decisions for them.

The first question to ask is how much flexibility the fund’s manager should have. Some funds have a largely fixed, classic 60% stock/40% bond allocation, such as the actively managed Vanguard Global Wellington , which typically has a 65% stock/35% bond allocation. Another good active balanced fund is Vanguard Global Wellesley Income , with a 35% stock/65% fixed-income split. For an indexed exchange-traded fund with fixed allocations, try iShares Core 60/40 Balanced Allocation, which has 23% of its portfolio overseas. Its expense ratio is only 0.15%. Still, Global Wellington—despite its 0.48% fee—has beaten it in the past five years in Morningstar’s global moderate allocation fund category.

“We generally stay within a relatively close [asset allocation] band,” says co-manager Loren Moran, who oversees the bond side of the portfolios for both Vanguard funds. Beneath the surface, she and her co-managers are making a lot of active moves in countries, sectors, and individual securities. Global Wellington’s equity portfolio recently had a 57% weighting in U.S. stocks, which is well below the 70% U.S. weighting in its FTSE Developed Index stock benchmark, and a 12% Japan stock weighting versus the index’s 6%.

Global Wellington equity manager Nataliya Kofman says the fund has had a “persistent [Japan] overweight relative to the benchmark over the past five-plus years.” She cites attractive valuations and top-down pressure from the Japanese government for better stewardship at companies, which historically let a lot of cash sit on their balance sheets doing nothing. That shift has led to higher dividends, which are a focus of the fund’s strategy.

She points to real estate company Mitsubishi Estate as an example. Tokyo’s real estate market, after a long deflationary trend, is finally coming back, and the company’s increased “pricing power [for rentals and sales] is sticking, and that is having a strong impact on their operating profit,” Kofman says. “This excess operating profit is coming back to shareholders in forms of buybacks and dividends.” That’s good news, as U.S. real estate has been in the doldrums.

With these two funds, you know what you’re getting allocation-wise, but what if stocks are a better value than bonds—or vice versa? There are some top global allocation funds, such as FPA Crescent and Pioneer Multi-Asset Income , with more flexible strategies. In the past 10 years, FPA Crescent’s net stock exposure, which includes short positions (or bets against stocks), has ranged from 55% to 74%, while its international stock exposure, which has ranged from 16% to 31%, was recently 23%.

FPA Crescent co-manager Mark Landecker says the fund’s goal is to deliver equity-like returns with much less downside risk over a market cycle, which is typically three to five years. And if that means holding cash—currently 38% of the fund’s portfolio—or foreign stocks, so be it. “We very much let value be our guide,” he says. “With the disparity in valuations between the U.S. and the rest the world, we’ve been allocating even more capital outside of the U.S.”

Landecker points out that many of the fund’s foreign stocks, such as Netherlands-based brewer Heineken, have global businesses, so it doesn’t really matter to him where they’re domiciled, especially when they trade at an unjustifiable discount to U.S. stocks.

“You can see the proof behind this in companies, one of which, for example, is in our portfolio, called Ferguson Enterprises,” he notes. “It’s the largest distributor of plumbing supplies in North America, but it was previously U.K.-listed and domiciled. They moved their headquarters officially over to the U.S. [in August 2024], and the [valuation] multiple went up demonstrably thereafter.” Though its business was the same, being in the U.S. gave Ferguson’s stock a bump.

This U.S. exceptionalism seems to be ending this year. While Landecker can buy bonds of all stripes—and once held upward of 35% in junk bonds after the 2008 crash—he doesn’t see much value in them today, and mainly buys U.S. ones when he does. That makes the fund less diversified globally than it could be, especially if one considers that foreign currencies have been strengthening against the dollar, adding to the returns of fixed income without the added volatility from stocks.

Pioneer Multi-Asset Income has similar latitude but with an income focus. “We cannot be more than 70% in equities,” says fund manager Marco Pirondini. “We have never been below 30%, but we have been anywhere from 30% to 70% over the past 14 years.” He can’t invest more than 40% outside of the U.S., but other than that, he has immense flexibility to buy global dividend-paying stocks, real estate investment trusts, preferred stocks, and bonds of all stripes, including foreign ones.

One worthy flexible ETF newcomer is GMO Dynamic Allocation. It is modeled after the successful GMO Global Asset Allocation fund, which has a go-anywhere value investment style but is only available to institutional investors. For those who want to make the most of their overseas exposure, such flexibility has advantages.

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