Balanced Fund


Also known as an asset allocation or hybrid fund, when a mutual fund places monies into several types of investment vehicles in the attempt to provide returns that include both income and growth, it is called a balanced fund.  Typically, the mix of investments includes common stocks, preferred stocks, bonds, and even money market funds.


While some investors are interested in income, others seek out growth.  Investors looking for a blend of income and capital appreciation are attracted to balanced funds.  The percentages applied to each asset class in this type of mutual fund will usually remain within a range of minimum and maximum values.

More conservative funds will invest a greater proportion of assets in fixed income securities, while more aggressive funds will allocate extra dollars to equities.  While the long term return on investment for a balanced fund may be lower than a fund investing 100% of assets into equities, the fund carries with it lower downside risk during a bear market.

Related Terms

mutual funds, preferred stock