Balanced Fund

What is a Balanced Fund?

Definition

A balanced fund, also known as asset allocation fund, is commonly classified by its equal asset allocation in a single portfolio. It is a mutual fund that comprises of stocks, bonds, and money market components in a portfolio. Some mutual funds only comprise of stocks (equity funds) while some only comprise of bonds (bond funds/ fixed income funds). The mutual funds which comprise of both stocks and bonds are the ones referred to as balanced fund.

Understanding a Balanced Fund

A balanced fund gives investors the option of having an all-in-one kind of mutual fund rather than selecting from a wide selection of mutual funds. The all-in-one mutual fund provides investors an opportunity to purchase regularly, get good returns on their investments, and avoid high volatility in case the market crashes. Also, in the case of stock prices falling the balanced fund will be able to sustain the value of stocks and bonds within the balanced fund.

With balanced funds, investors can invest their money across a set of assets by mixing low-to-medium risk stocks, bonds, and money markets or other securities in their portfolio. The goal is for investors to increase income and capital appreciation. Both retired and conservative investors who seek asset growth that outdoes inflation with an income that meets current needs can engage balance funds.