Balanced Funds


The term balanced fund refers to a portfolio of stocks and fixed income securities that do not change their asset mix over time.   The objective of a balanced fund is to provide investors with both capital appreciation as well as income.


balanced fundBalanced funds are a subset of asset allocation funds, since the fund's management team attempts to maintain a pre-established mix of assets over time.  Investors can find balanced funds that offer varying degrees of volatility, income, and the opportunity for capital appreciation.

For example, an investor that values capital appreciation can find a fund that allocates more assets to equities, while an investor that values income can find a fund that allocates more assets to bonds.  One of the more commonly found allocations includes 60% of assets to equities and 40% to bonds.

Investors choosing balanced funds will have a wide range of risk tolerance scores, since asset allocation will determine volatility.  As the proportion of assets allocated to equities increases, there is an increase in the fund's potential return, volatility, and risk.

Related Terms

value funds, emerging markets funds, income funds, global funds, sector funds