A Cheap Allocation Fund That Stays Flexible

Susan Wasserman: Silver-rated Fidelity Puritan is a solid example of an allocation fund that has successfully used its flexibility. The fund targets a neutral weighting of 60% equities and 40% bonds, but lead portfolio manager Ramin Arani has wiggle room to deviate from that neutral weighting. So, for example, you've seen the fund fluctuate around 70% in equities over the last four years because Arani has seen more compelling opportunities in stocks than in bonds.

And within stocks the fund definitely has a growth tilt--names like Apple, Alphabet, Facebook, and Amazon are at the top of the portfolio.

The bond portfolio is intended to behave a lot like the Agg, but Arani also has the flexibility to dial up the exposure to lower credit-quality bonds based on where his comanagers, Michael Plage and Harley Lank, see opportunity. So you see a bit more in A, BBB, and B bonds than the typical allocation fund in the 50% to 70% equity bucket.

Since Arani took over 10 years ago, the equity and bond sleeves have worked well together to generate peer-beating total- and risk-adjusted returns. Plus, the investor share class is 56 basis points, making this one of the cheaper allocation fund options.