Columbia Management Group has introduced the Columbia Thermostat Fund, a fund whose investment mandate permits it to reallocate between five stock and three bond mutual funds.
- As the S&P 500 rises and stocks become more expensive, the fund will sell a portion of its stock funds and invest in bonds, and do the converse thing as the S&P falls. But the decisions to switch the bond/stock ratio is determined by preset levels.
"Buying against the trend selling strength and buying dips aims for modest, steady growth that we believe may help out even out the sharp moves in the stock market," said Ralph Wanger, creator of the fund. "The buy-and-hold strategy has worked marvelously in bull markets," agreed Chuck McQuaid, a member of the funds advisor board. "However, there have been long periods in the past when buy-and-hold was not the best strategy, such as 1930-1954 and 1969-1981, when the market fluctuated but did not make significant new highs."
The five stock funds the Columbia Thermostat Fund has as its disposal are: Liberty Acorn, Liberty Acorn Twenty, Liberty Growth Stock, Liberty Growth & Income and Liberty Select Value. The bond stable includes: Liberty Federal Securities, Liberty Intermediate Bond and Columbia High-Yield.