Saying Goodbye to Buy-and-Hold

Jeff Knight, portfolio manager for the Putnam Asset Allocation funds, says the better strategy is to shuffle between asset classes and world markets.

Author:: Gregg Greenberg
Publish date:: Aug 3, 2005 12:24 PM EDT

Investors have long been counseled that the path to prosperity was through "buying and holding" stocks for the long term. But a number of mutual fund managers may be changing their tune.

One such pro straying from the conventional wisdom is Jeff Knight, portfolio manager for the

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Putnam Asset Allocation Growth and

(PABAX) - Get Report

Putnam Asset Allocation Balanced funds. Knight is forecasting a long-term, low-return world in which traditional buy-and-hold investing will not produce the kinds of returns to which American investors have grown accustomed over the past half-century.

Instead, Knight believes the best strategy for beating the indices going forward is to shuffle nimbly between asset classes and world markets.

Knight's growth fund currently holds 25% of its assets in large-cap growth stocks such as

Intel

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and

Microsoft

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; 25% in large-cap value; 25% in international stocks, including emerging markets; 6% in small-cap U.S. stocks (growth and value), and the rest in fixed income and cash.

So far, Knight's mix of stocks and bonds has been right on target. The fund is up 5.85% year to date, more than 3 percentage points above the

S&P 500

(SPX)

TheStreet.com's

Gregg Greenberg spoke with Knight about how he plans to outperform in a low-return environment by shifting assets.

To watch the StreetWatch video, click here.