Definition
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.
Explanation
Balanced 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
- The term value fund refers to a portfolio of stocks that are deemed to be undervalued by the market. The objective of a value fund includes not only providing investors with capital appreciation, but also a steady stream of dividends.
Moneyzine EditorSeptember 21st, 2023 
The term emerging markets fund refers to a portfolio of securities originating from one or more developing countries. The objective of an emerging markets fund is to provide investors with higher than average returns relative to those available in what are considered developed or industrialized countries.Moneyzine EditorJanuary 16th, 2024
The term income fund refers to a portfolio of securities that are expected to provide investors with a reliable source of monthly or quarterly income. These funds may consist of bonds, money market funds, as well as equities that pay relatively high dividends.Moneyzine EditorJanuary 19th, 2024
The term global fund refers to a portfolio of stocks and fixed income securities issued by companies and governments around the world. The objective of a global fund is to provide investors with a hedge against inflation, and take advantage of geographies offering faster growth than found domestically.Moneyzine EditorJanuary 19th, 2024- The term sector fund refers to a portfolio of securities issued by companies that operate in a specific industry or segment of the economy. The objective of these funds is to provide the investor with the opportunity to diversify within the sector.Moneyzine EditorSeptember 21st, 2023
