A Columbus, Ind.-based firm has launched a new mutual fund with hopes of catering to conservative investors.
The Securities and Exchange Commission on Thursday approved the Sound Mind Balanced Fund, the third component in the Sound Mind Investing Fund family.
It includes 60 percent equity investments using the same strategy that’s a hallmark of the firm. But it also will include 40 percent bonds to provide balance for more risk-averse investors.
Sound Mind is among just a handful of mutual fund families based or managed in the state.
Its equity-investment strategy differs from its counterparts. Instead of betting on stocks, Sound Mind invests in other mutual funds that are performing well, based on relatively short-term metrics. It sticks with them until their performance slips out of the top quartile, based on returns over three-,six- and nine-month periods.
The approach was initially developed as the driving philosophy in a Christian financial newsletter, a separate entity called the Sound Mind Investing newsletter.
It has paid off this year. As of Tuesday, Sound Mind's flagship fund, comprised entirely of equity investments, was up 18 percent year-to-date. But it can force short-term pain, as fund managers must follow the prescribed formula, rather than dropping funds as soon as they begin performing poorly.
The new fund will incorporate the same strategy—termed “upgrading”—into its equity component. Sound Mind has brought on another Columbus firm, Reams Asset Management Co., to serve as advisers on the bond portion of the fund.
Fred Beerwart, Sound Mind’s chief compliance officer, said the new fund meets a need for the fund’s current investors, many of whom read the newsletter and are advised to diversify their portfolios.
“The 60-40 balanced approach does fit hand in glove with what our client base has been taught,” he said.