Critics accuse mixed funds of being neither fish nor meat and also too expensive. Why the funds can still be the right choice for some investors.
Stocks on their own sound too speculative? Bond funds, on the other hand, are safer and how was that again with precious metals and real estate? The abundance of investment options can be confusing, especially for small investors. Many also rely on security and shy away from investing in the stock market. A fund that combines multiple investment options may sound attractive to you. But many experts are skeptical.
"With mixed funds, all the possibilities of the capital market are exploited," stresses financial planner Constanze Hintze from Munich the positive aspects. It includes high-yield, high-risk stocks like stocks, but also safer stocks like government bonds. Therefore, compared to pure equity funds, for example, it is classified as less risky. But the mixture also makes it clear, says Hintze: "If the market goes up, the mixed fund will not be at the top."
For financial adviser Simone Bußmann from Ludwigsburg, it depends on the needs and risk appetite of the customer whether she recommends buying. Depending on the type of mixed fund, the risk is lower than with pure equity funds. For Bußmann, a good mixed fund contains a flexible proportion of shares and bonds, precious metals and currencies. But the financial expert also says: "There are many mixed funds whose fee model is disproportionate to the income."
Financial planner Stephanie Kühn from Westerstede is not a big fan of this type of product. On the one hand, this is due to the risk assessment. "People are looking for the jack of all trades with a lot of returns and little risk," criticizes Kühn. "They have to have their teeth pulled." Because depending on the composition, a mixed fund can contain an equity portion of 70 percent. "Now that's a risk." In her experience, when clients come to her who have already invested in mixed funds, they tend to be disappointed.
Michael Ritzau, honorary consultant from Inzlingen, cannot get anything out of mixed funds. "They're the worst choice among actively managed funds," he says. This is mainly due to the costs. The management fees for a mixed fund are always higher than those for an ETF (exchange traded fund) that is not managed by an exchange manager. "With an index fund, there are only about a fifth to a tenth of the costs," he says. That adds up enormously over the years. Ritzau's verdict: "Mixed funds destroy returns. On average over the last ten years they have only achieved about half the returns of their benchmark indices."
For him, the costs of buying, selling and managing are crucial when choosing a fund. The higher costs of mixed funds could not be justified by the fact that they are curated by a manager. With index funds, this happens automatically and is therefore cheaper. "You can be lucky and catch a mixed fund that achieves better values than the index," says Ritzau. But that happens rather seldom. After deducting the costs, actively managed money must always achieve lower returns than passively managed money on average.
Kühn also sees no advantage in active management. Actually, the funds should be reallocated depending on the market situation. "But that usually doesn't work," says Kühn. She points out that this process takes time: "A major fund shift can take a week, and then the situation may have changed again."
Like Ritzau, she also criticizes the management fees. One to two percent management fees per year are due for a mixed fund, with an ETF it is usually 0.2 to 0.6 percent. "The alternative is ultimately to build the mixed fund yourself," says the financial planner. The first thing to do is to check your own needs, how much money needs to be available immediately and how much money can be invested in the long term. Then investors would have to clarify for themselves how willing they are to take risks, explains Kühn. They then put together a portfolio according to their needs.
"I tend towards a mixture of call money and time deposits with different maturities - currently a maximum of three years - and stock ETFs," says Kühn. If you need money quickly, you can use the overnight money and do not have to sell any fund shares. Another tip: "If you buy directly from the stock exchange, you save the front-end load."
Ritzau also advises investors to first check which investment suits their needs. For example, instead of buying a mixed fund consisting of stocks and bonds, he recommends investing in stocks and bonds ETFs. "How high the proportion of shares and bonds is depends on the individual risk assessment," says Ritzau.
However, in Kühn's eyes, mixed funds have one justification: "They calm the psyche of investors." The mixed fund in the portfolio can help savers better withstand the risks of other investments.
