# 2 Moderate Allocation

U.S. News evaluated 244 Moderate Allocation Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

Summary

For Fidelity Puritan, the times are certainly changing: A shift in management and strategy has put this balanced fund, or one that invests in both equities and bonds, on a new course.

As of February 04, 2015, the fund has assets totaling $24.86 billion. Its portfolio consists primarily of equities.

Recently, the fund has moved further into the growth category under the leadership of manager Ramin Arani. Says Morningstar, When Arani shared stock-selection picks with value skipper Steve Petersen, the fund’s stock portfolio landed squarely in blend territory. Since he took full control [in 2008], though, it has landed in the growth camp—or at least very near it. This approach has helped the fund recover from the downturn, when it suffered from exposure to energy and subprime mortgages. The fund has returned 10.50 percent over the past year and 12.94 percent over the past three years.

The fund has a respectable track record. Arani came on board as a comanager in 2007, and since then the fund has experienced a number of changes. Notably, it has switched benchmarks from the Russell 3000 Value Index to the S&P 500 Index. This has accompanied the shift from Petersen’s focus on attractive prices to Arani’s preference for growth picks. Arani pays close attention to prices as well and is looking for stability in some areas. For example, he generally sticks close to the fund’s target allocation for stocks, which according to Morningstar is 65 percent. The fund has returned 11.92 percent over the past five years and 7.18 percent over the past decade.

Investment Strategy

Management favors companies that can generate unexpected earnings growth. Apart from looking for long-term winners, Arani likes to invest in thematic groups of stocks in order to capitalize on trends. After six to 24 months, management will re-evaluate a company it buys and choose to maintain, increase, or decrease its position. The fund is diversified across market capitalizations but strongly leans toward large- and mega-cap picks. Under Arani, there is a newfound focus on growth.

Role in Portfolio

Morningstar calls it a core investment.