Blake Wolfe While the typical balanced fund is becoming a rarity among pension plans, a segment of plan sponsors continue to utilize these funds — albeit with added diversification. Traditionally, such funds have invested 60 per cent in equities and 40 per cent in bonds. But with investment options for pension plans expanding over the last 20 years, institutional investors have become more sophisticated, looking beyond the balanced fund to diversify their asset classes and increase returns, says Erwan Pirou, chief investment officer for retirement solutions in Canada at Aon. “The problem [with balanced funds] is you miss out on the risk of alternatives, which can give you a good diversification and protect you from equity risk to a certain extent. Most balanced funds tend to be heavy on equity risk, because it’s the only lever they use to add value.”