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      Best Balanced Funds: Mutual Fund Investment Guide

      By Wasim Omar

      Published on

      April 19, 2023

      10:03 AM UTC

      Last Updated on

      November 1, 2023

      7:44 AM UTC

      Best Balanced Funds: Mutual Fund Investment Guide

      Investing in balanced mutual funds is a smart move for any investor looking to diversify their portfolio and minimize risk. With the potential for both capital appreciation and regular income, best balanced funds offer the best of both worlds.

      But with so many funds available, it can be difficult for investors to determine which ones are right for them. That’s why a comprehensive guide to investing in balanced mutual funds is essential.

      This guide offers a detailed overview of best balanced funds, explaining what they are, how they work, and what their potential benefits and drawbacks are.

      Whether one is a seasoned investor or just starting out, this guide can help navigate the world of balanced mutual funds with confidence.

      With its clear and concise explanations, it is an indispensable resource for anyone looking to build a strong and diversified investment portfolio.

      What Is Balanced Fund?

      A balanced fund is a type of investment vehicle that seeks to provide investors with a mix of both income and capital appreciation by investing in a combination of stocks, bonds, and other securities.

      These funds aim to provide a balanced approach to investing, offering both the potential for growth and income while also minimizing risk through diversification.

      Let’s dive deeper to explore what is balanced fund and what it offers.

      1. Asset Allocation And Diversification

        Balanced funds typically have a predetermined asset allocation that balances the proportion of equity and fixed income securities within the fund.

        This allocation is adjusted periodically by fund managers to maintain a consistent balance between asset classes.

        By diversifying across multiple asset classes, the fund aims to minimize risk and provide more stable returns over the long term.

      2. Risk Management

        While balanced funds aim to provide a balance between growth and income, they also seek to manage risk by investing in securities that offer both stability and potential for growth.

        The fund managers aim to achieve this balance by selecting securities based on a range of factors, including the overall economic environment, interest rate expectations, and market conditions.

      3. Investor Benefits

        For investors, knowing “what is balanced fund” is an opportunity that offers the potential for long-term growth while minimizing the risk of significant losses.

        The balanced approach to investing can help investors achieve their financial goals by providing a mix of both income and growth, making it a popular choice for many investors seeking a diversified portfolio.

      Why Invest in Balanced Mutual Funds?

      Wondering why balanced mutual funds are all the rage? Well, let’s break it down.

      Balanced funds are like the ultimate middle ground in the investing world. They offer a sweet mix of stocks and bonds, creating a well-balanced portfolio that’s not too hot or too cold – it’s just right.

      Why Invest in Balanced Mutual Funds

      Why do so many investors love balanced mutual funds? First off, they bring diversification to the party.

      With a mix of assets, you’re not putting all your eggs in one basket, reducing risks and potential losses.

      Plus, they’re perfect for those looking to dip their toes in the stock market without diving in headfirst.

      The best balanced funds offer stability, and steady growth, and can be a solid choice for long-term goals, like retirement or a dream vacation.

      So, if you want the best of both worlds – growth, and stability – balanced mutual funds might be your ticket to a stress-free investing scene.

      Advantages & Disadvantages of Balanced Funds

      Now let’s dive into the nitty-gritty of balanced funds! Now, before you leap headfirst into the investment world, it’s crucial to weigh the pros and cons.

      So, let’s break it down and see what makes these funds tick:

      1. Advantages

        1. Stability

          One of the biggest perks of the best balanced funds is their ability to weather market turbulence. These funds spread their wings across both stocks and bonds, creating a fine balance.

          When the stock market goes on a wild rollercoaster ride, the stability of bonds helps keep your investment ship steady.

        2. Easy Diversification

          Say goodbye to the headache of handpicking individual securities. The best balanced funds do the heavy lifting for you.

          By investing in a mix of stocks, bonds, and sometimes cash, they offer built-in diversification. It’s like having a diverse portfolio neatly packed into a single fund.

        3. Stress-Free Portfolio Management

          If you’re not a finance whiz or just don’t have the time to actively manage your investments, balanced funds come to the rescue.

          With skilled fund managers at the helm, you can relax and let the pros handle the complexities while you focus on other things in life.

      2. Disadvantages of Balanced Funds

        1. Not Ideal for Booming Growth

          While diversification is great, it comes with a cost. Even the best balanced funds may not excel in a bull market, as they are designed to be more conservative.

          So, if the stock market is booming, you might miss out on the full potential gains that specialized equity funds could offer.

        2. Fees and Expenses

          Even the best balanced funds are not exempt from expense ratios and management fees. These costs can eat into your returns over time, so it’s crucial to keep a close eye on them.

        3. Locked-In Asset Allocation

          Once you invest in a balanced fund, you’re entrusting the fund manager to make the right allocation decisions.

          While this can be advantageous, it means you don’t have the freedom to tweak the asset mix as per your preference or market conditions.

      Elements of The Best Balanced Fund

      Investing in the stock market can be a daunting task, especially for individuals who lack the expertise and knowledge required to make sound investment decisions.

      Fortunately, balanced funds provide a viable option for those seeking a diversified investment portfolio with reduced risk.

      Here are some of the top features to look for in the best balanced funds.

      1. Asset Allocation

        The best balanced funds have a well-diversified portfolio, with a mix of assets that helps reduce risk. Asset allocation refers to the percentage of stocks, bonds, and cash in the portfolio.

        An ideal balanced fund should have a balanced allocation of these assets based on the investor’s risk tolerance.

      2. Diversification

        Diversification is also a critical component of a good balanced fund. By investing in a variety of assets, a balanced fund can help reduce risk and potentially increase returns.

      3. Expense Ratio

        Expense ratio is an important factor to consider when choosing a balanced fund. It represents the cost of managing the fund and is expressed as a percentage of the fund’s assets.

        The best-balanced funds have a low expense ratio, which helps investors to maximize their returns.

      4. Performance

        The performance of a balanced fund is a key factor to consider when selecting a fund. It is important to evaluate the fund’s historical returns, as well as its performance in different market conditions.

        The best-balanced funds should have a consistent track record of performance, indicating a strong management team and strategy.

      5. Active Management

        While passive management can be a good strategy for some investors, others prefer active management.

        A good balanced fund should have a skilled fund manager who can make informed decisions about when to buy and sell different securities.

      Best Balanced Mutual Fund For Investors

      Investing in mutual funds can be a great way for investors to diversify their portfolios and reduce risk. However, with so many options available, choosing the best balanced mutual fund can be overwhelming.

      So let’s see what these funds are.

      What Is A Balanced Mutual Fund?

      A balanced mutual fund is a type of mutual fund that invests in both stocks and bonds.

      This type of fund seeks to balance the risk and reward by investing in a mix of high-risk, high-return equities and low-risk, low-return fixed income securities.

      For investors looking for the best balanced mutual fund, there are some standout options worth considering.

      1. Vanguard Balanced Index Fund (VBINX)

        The Vanguard Balanced Index Fund (VBINX) is a popular choice for investors looking for a well-diversified, low-cost fund.

        This fund invests in both stocks and bonds, with the goal of achieving long-term growth while minimizing risk.

        With an expense ratio of just 0.18%, VBINX is one of the most affordable balanced mutual funds available.

      2. Rowe Price Balanced Fund (RPBAX)

        Another great option for investors looking for a balanced mutual fund is the T. Rowe Price Balanced Fund (RPBAX).

        This fund invests in a mix of stocks, bonds, and cash, with a focus on high-quality companies with strong fundamentals.

        RPBAX has a slightly higher expense ratio than VBINX, at 0.53%, but it has consistently delivered solid returns over the long term.

      3. Fidelity Balanced Fund (FBALX)

        For investors who prefer to work with Fidelity, the Fidelity Balanced Fund (FBALX) is a strong choice.

        This fund invests in a mix of U.S. stocks and bonds, with a focus on large-cap companies.

        With an expense ratio of 0.50%, FBALX is slightly more expensive than VBINX but has a strong track record of performance.

      4. abrdn Total Dynamic Dividend Fund (AOD)

        Looking for a balanced fund that delivers the goods? Check out the abrdn Total Dynamic Dividend Fund (AOD).

        This closed-ended equity mutual fund knows how to make your money work for you.

        With a focus on growth and value stocks from large-cap companies across diverse sectors worldwide, it offers steady monthly payouts and has consistently generated 8%+ yields over the past decade.

        Sure, it has a high expense ratio and its pharmaceutical stocks haven’t impressed, but its futuristic tech portfolio and low beta keep things interesting.

        It’s a dividend paymaster with a sweet discount, so it deserves thought.

      5. New Germany Fund (GF)

        Looking for a balanced mutual fund for German exposure? Check out the DWS-managed New Germany Fund (NYSE: GF).

        Economic data hasn’t been great, but the fund still has its silver linings.

        It invests in cash-rich firms with strong balance sheets, ready to weather any credit tightening.

        German households are also doing well, potentially leading to a consumer-led rebound.

        Though not perfect, the historically wide mid-teens Net Asset Value (NAV) discount makes GF an intriguing option for patient investors who believe in the German recovery.

      6. Nuveen AMT-Free Municipal Value Fund (NUW)

        NUW is an excellent balanced mutual fund for investors because it offers a smart approach to diversification and reduced operational leverage.

        While many funds are cutting distributions due to rising borrowing costs, NUW has managed to maintain and even raise its distribution, making it stand out.

        Its focus on non-leveraged assets with long maturities means it may benefit from potential rate cuts, and the allocation to high-quality, longer-maturity fixed-income investments adds stability to your portfolio.

        Despite the risks associated with interest rate changes, NUW’s strong performance and distribution growth potential make it a promising investment choice.

      7. Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO)

        The Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (NYSE: ETO) is a gem for income-oriented investors.

        It’s not your typical amortizing fund – it offers high total returns and a sweet 7.1% forward distribution yield.

        With a diverse global stock portfolio (40% U.S. equities, 40% global equities, 20% fixed income), it’s been delivering a solid 9.6% average annual return over 5 years.

        Though it can be a tad volatile, ETO keeps up with the MSCI World Index. Trading at an 8.6% discount to NAV, it’s a rare opportunity.

      8. First Trust Energy Infrastructure Fund (FIF)

        The First Trust Energy Infrastructure Fund (NYSE: FIF) is a good choice for investors seeking balanced mutual funds.

        Despite some soft performance in 2023 due to its heavier allocation to energy and utilities, the fund’s attractively priced deep discount and competitive distribution rate make it an appealing investment option.

        FIF’s objective of seeking a high level of total return with an emphasis on current distributions paid to shareholders makes it flexible in investing within the energy and utility sectors.

        Additionally, the recent increase in distribution offers potential for capital gains and attractive investment opportunities.

      9. BlackRock Enhanced Global Dividend Trust (BOE)

        The BlackRock Enhanced Global Dividend Trust (NYSE: BOE) is a top choice for investors seeking high income in today’s inflationary environment.

        With a solid 7.51% yield, it outperforms other options.

        The covered call strategy might raise concerns, but it limits risks. Most of the portfolio consists of dividend-paying stocks, ensuring a safer income source.

        The current 12.94% discount on its net asset value makes it an attractive deal.

        If you’re bullish on income generation with some stock market exposure, BOE is worth considering for your portfolio.

      10. Heartland Value Fund (HRTVX)

        For investors looking for a well-balanced fund, the Heartland Value Fund stands out as a promising choice.

        While the overall market is showing signs of risk-taking, the fund’s disciplined approach and focus on small-cap names offer a potential advantage in narrow markets.

        With a history of outperformance in such conditions, the fund’s portfolio activity, including new additions like Mohawk, Benchmark Electronics, and Healthcare Services Group, showcases its commitment to uncovering compelling valuations.

        Furthermore, the fund’s relatively low expense ratio of 0.98% for institutional class investors makes it an appealing option for long-term planning.

      Best Balanced Funds For Retirement

      As people approach retirement, their investment objectives tend to shift from a focus on capital appreciation to a focus on capital preservation and generating income.

      Best Balanced Funds for Retirement

      Balanced funds are an excellent option for individuals seeking a mix of stocks and bonds in a single investment vehicle.

      They offer a blend of growth and stability that can provide retirees with both capital appreciation and income.

      Here are some of the best balanced funds for retirement:

      1. Vanguard Wellesley Income Fund (VWINX)

        The Vanguard Wellesley Income Fund is a popular choice for retirees seeking a reliable source of income.

        It invests in a mix of high-quality corporate bonds and dividend-paying stocks, with an emphasis on income over growth.

        With an expense ratio of just 0.23%, it’s also one of the most affordable balanced funds available.

      2. Rowe Price Capital Appreciation Fund (PRWCX)

        The T. Rowe Price Capital Appreciation Fund is a well-diversified fund that invests in a mix of growth stocks, value stocks, and bonds.

        It has a long track record of outperforming its benchmark and has low expenses, with an expense ratio of just 0.68%.

      3. American Funds American Balanced Fund (ABALX)

        The American Funds American Balanced Fund is another popular choice for retirees seeking a mix of stocks and bonds.

        It invests in a diverse range of companies and bonds, with an emphasis on capital preservation and generating income.

        With a relatively low expense ratio of 0.56%, it’s an affordable option for retirees.

        In general, balanced funds can be a great choice for retirees who want both growth and stability in their investments.

        To name some of the best balanced funds for retirement available in the market, these three are just a few examples.

      4. KKR Income Opportunities Fund (KKO)

        The KKR Income Opportunities Fund (NYSE: KIO) is an attractive option for retirement investors looking to generate income. It is among the best balanced funds out there.

        It has been around for almost a decade and currently trades at a discount to NAV, offering a forward annual yield of about 12.5%.

        The recent increase in the monthly dividend by 15% further enhances its appeal.

        While there is a rights offering for existing shareholders, the fund’s strong backing by KKR Credit Advisors LLC and the potential for NAV to continue rising make it a compelling choice.

        Just be mindful of your risk tolerance and consider diversifying with other asset classes.

      5. Oakmark Equity and Income Fund (OAKBX)

        For retirement, one of the best balanced funds to consider is the Oakmark Equity and Income Fund.

        It has a solid track record with a compound rate of return of 9.5% since its inception in 1995, outperforming the Lipper Balanced Fund Index.

        The fund’s approach of diversification between stocks and fixed-income investments helps reduce portfolio volatility, which is crucial for retirees.

        Additionally, its focus on investing in undervalued securities enhances the potential for upside gains while minimizing downside risk.

        With a balanced asset allocation and a history of success, it’s a strong contender for retirement-oriented investors.

      6. Akre Focus Fund (AKREX)

        When it comes to retirement, the Akre Focus Fund’s Institutional share class (AKRIX) stands out as a solid choice.

        Its performance for the second quarter of 2023 was 8.62%, slightly below the S&P 500 Total Return at 8.74%.

        However, its trailing 12-month performance of 15.07% shows its resilience even during market fluctuations.

        The fund’s investment strategy of focusing on well-understood and well-purchased businesses, particularly those poised to benefit from Artificial Intelligence, makes it an attractive option for long-term growth.

        It does this without the need to chase riskier, overvalued stocks, yet stands tall among best performing balanced funds.

      7. Contrarian All-Weather Portfolio (ABALX)

        When it comes to retirement, you want an investment that can weather any storm, right? That’s where the Contrarian All-Weather Portfolio shines.

        During the recent banking crisis, while the S&P 500 took a 2% hit, this portfolio actually gained 1.6%.

        It’s got a smart mix of defensive assets like treasury bonds, TIPs, gold, silver, and cash, which helped it stay in the green.

        This feature is precisely what makes ABALX a great contender among the best performing balanced funds.

        Plus, its strong track record over the past 25 years, with solid annual returns of nearly 6% and low drawdowns, makes it a reliable choice for those who value long-term success and smart diversification.

      8. Vanguard LifeStrategy Conservative Growth Fund (VSCGX)

        The Vanguard LifeStrategy Conservative Growth Fund is an excellent choice for retirement investors.

        It focuses on generating current income and offers low to moderate capital appreciation, making it suitable for retirees seeking a balanced approach.

        The fund’s asset allocation strategy of 60% fixed-income securities and 40% common stocks provides a level of stability while still offering the potential for growth.

        With its diversified mix of bonds and government securities, the fund aims to minimize risks and maintain steady returns, aligning perfectly with retirement goals.

        It’s a smart pick for investors looking for a stable, long-term option to support their retirement journey.

      9. Vanguard Wellington Fund (VWELX)

        The Vanguard Wellington Fund is another stellar pick for retirement investors looking for a balanced fund.

        With its long history dating back to 1929, it has demonstrated stability and reliability.

        The fund’s diversified portfolio includes both dividend-paying and non-dividend-paying stocks of established large companies, providing potential for capital appreciation.

        Additionally, its fixed-income allocation, with a mix of investment-grade corporate bonds and government securities, offers a moderate level of current income.

        Such a balanced approach can help retirees preserve and grow their wealth while generating steady returns for their golden years.

      10. American Funds American Balanced Fund (RDHTX)

        The American Funds 2045 Target Date Retirement Fund is a top choice for retirement investing.

        Managed by Capital Research and Management Company, it aims for growth, income, and capital preservation.

        As retirement nears, the fund gradually shifts its focus to fixed-income, equity-income, and balanced funds.

        Its diverse portfolio, spanning global equity and fixed-income markets, provides a balanced approach to wealth building.

        With a solid track record and benchmarked against S&P 500 Index, MSCI EAFE Index, and Barclays Capital U.S. Aggregate Index, this fund offers peace of mind for investors planning their retirement.

      Best Performing Balanced Funds

      1. Vanguard LifeStrategy Moderate Growth Fund (VSMGX)
      2. Vanguard Balanced Index Fund Admiral Shares (VBIAX)
      3. iShares Core Growth Allocation ETF (AOR)
      4. iShares Core Moderate Allocation ETF (AOM)
      5. Fidelity Freedom Index 2030 Fund Investor Class (FXIFX)
      6. WisdomTree U.S. Efficient Core Fund (NTSX)
      7. Cambria Global Asset Allocation ETF (GAA)
      8. SPDR SSGA Multi-Asset Real Return ETF (RLY)
      9. T. Rowe Price Retirement 2030 Fund (TRRMX)
      10. American Funds 2025 Target Date Retirement Fund (TAAGX)

      Balanced Funds for the Long-Term

      1. Vanguard LifeStrategy Conservative Growth Fund (VSCGX)
      2. Vanguard Wellington Fund Investor Shares (VWELX)
      3. Fidelity Balanced Fund
      4. T. Rowe Price Spectrum Conservative Allocation Fund
      5. Bruce Fund (BRUFX)
      6. American Century Balanced Fund (ABALX)
      7. PIMCO Total Return Fund (PTTRX)
      8. DFA Balanced Fund (DFABAX)
      9. Dodge & Cox Balanced Fund (DODGX)
      10. Schwab Balanced Fund (SWLBX)

      How to Invest in Balanced Mutual Funds Online?

      Now let’s talk about investing in balanced mutual funds online. It’s easier than ever to get started.

      First, find a reliable online brokerage or investment platform that offers a wide range of funds.

      Once you’re set-up, explore their selection of balanced funds – they usually have categories for conservative, moderate, and aggressive risk levels.

      Take a moment to read the fund’s description, historical performance, and expense ratio. Look for funds that match your investment goals and risk acceptability.

      When you find the perfect fit, simply click the “Invest” button, enter the amount you want to invest, and you’re officially a balanced fund investor.

      Just remember, like any investment, stay informed, and regularly review your portfolio to keep it in line with your financial objectives.

      Who Invests in Balanced Funds?

      Balanced funds are like a magnet for investors who want the best of both worlds – some growth and some stability. Typically, folks who don’t want to put all their eggs in one basket opt for balanced funds.

      Who Invests in Balanced Funds

      They are perfect for those who want exposure to stocks for that sweet growth potential and bonds for that comforting safety net.

      Balanced funds appeal to both newbie investors and seasoned pros. Newbies appreciate the simplicity of a one-stop shop, while pros see it as a smart way to diversify their portfolio without too much hassle.

      If you’re looking to smooth out the ride and don’t want to get too adventurous, balanced funds might just be your ticket to a more balanced investment journey.


      Balanced funds are a popular investment option for many investors because they offer a diversified portfolio of stocks, bonds, and other assets.

      These funds aim to strike a balance between growth and income, providing investors with steady returns over the long term.

      However, like all investment options, balanced funds have their limitations.

      1. Limited Customization

        One of the primary limitations of balanced funds is that they offer limited customization options. Investors cannot choose which specific stocks or bonds they want to invest in.

        Instead, the fund manager makes those decisions on behalf of the investors. This can be frustrating for investors who have specific investment goals or preferences.

      2. High Fees

        Another limitation of balanced funds is that they tend to have higher fees than other investment options, such as index funds.

        This is because the fund manager is actively managing the portfolio and making investment decisions. These higher fees can eat into the investor’s returns over time.

      3. Market Volatility

        Balanced funds are also subject to market volatility, which can impact their performance. During a market downturn, the fund’s value may decline, and investors may experience losses.

        While these losses may be temporary, they can be a source of stress for investors who are relying on the fund for income or growth.

      4. Performance Tied To Fund Manager’s Skill

        Balanced funds’ performance is largely dependent on the fund manager’s skills and investment strategy.

        Investors should carefully research and select a fund manager who has a proven track record of managing balanced funds to ensure optimal returns.

        However, even the most skilled fund managers can underperform, resulting in lower returns for investors.


      Balanced funds can be a great choice for investors who desire a well-diversified portfolio that balances risk and return.

      These funds are particularly suitable for those who do not want to actively manage their portfolio.

      There are various options available for investors, and they can choose best balanced fund that aligns with their investment goals and risk tolerance.

      Many of these funds offer professional management and automatic rebalancing, which makes them a convenient and effortless investment option.

      With a diversified portfolio, balanced funds can withstand market volatility and provide a smoother investment experience for investors.

      Ultimately, the best-balanced funds strike the right balance between risk and reward, offering investors a sense of confidence that comes with a well-managed investment strategy.


      Who Should Invest In Balanced Mutual Funds?

      Balanced mutual funds are a great investment option for those seeking a balanced portfolio with a mix of stocks and bonds.

      They are ideal for beginners who want to start investing but don’t have the expertise to manage their portfolios.

      They also offer stability to investors who seek to reduce risks and enjoy a steady return on investment.

      How Many Funds Should Be In A Balanced Portfolio?

      The number of funds in a balanced portfolio depends on several factors such as an investor’s risk tolerance, financial goals, and investment horizon.

      Typically, a balanced portfolio can consist of two to five funds, each providing exposure to different asset classes.

      Diversification is key in a balanced portfolio, and investors should aim to spread their investments across different sectors, regions, and types of assets.

      What Is A Good Mix Of Mutual Funds?

      A good mix of mutual funds should include a mix of equities, bonds, and other assets such as commodities and real estate.

      Investing in mutual funds with different investment styles and across various sectors and geographies can also help achieve diversification.

      A financial advisor can help determine a good mix of mutual funds based on an individual’s unique circumstances.

      What’s The Difference Between a Growth Index Fund and A Balanced Fund?

      A growth index fund primarily invests in stocks with the potential for high returns, while a balanced index fund invests in a mix of stocks and bonds to maintain a balance between growth and income.

      How Do You Pick Between Different Balanced Funds?

      When picking between different balanced funds, consider factors like risk tolerance, investment objectives, expense ratios, historical performance, and the fund’s asset allocation to align with your financial goals.

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