Balanced funds are popular with investors looking for a combination of growth and income from their portfolio. The funds hold a combination of stocks and bonds and are generally less volatile than funds that only hold stocks.
Here’s what you need to know about balanced funds and some of the best balanced ETFs and mutual funds to consider for your portfolio.
What are balanced funds?
Balanced funds hold a combination of stocks and bonds and seek to achieve both growth and income goals for their investors. Balanced funds can invest 60 percent of their assets in stocks, while the remaining 40 percent are invested in bonds. Allocations may vary depending on the fund’s strategy.
Balanced funds are ETFs or mutual funds. ETFs are exchange-traded funds that hold baskets of securities, similar to the structure of mutual funds. Unlike mutual funds, ETFs trade on an exchange throughout the day, just like stocks.
Balanced funds offer investors a diversified portfolio that is likely to be less volatile than a fund that only holds stocks. A balanced fund will also deliver more growth than an all-bond fund because it has exposure to equities. It really is a balanced portfolio strategy.
One downside to using balanced funds is that you have no control over the fund’s asset allocation, so if a 60/40 portfolio, for example, doesn’t suit your needs, you may need to find another strategy.
Top balanced ETFs and mutual funds for your portfolio
*Data as of April 12, 2024.
Vanguard Balanced Index Fund Admiral Shares (VBIAX)
This investment fund offers investors a balanced fund at very low costs. The fund typically invests about 60 percent of its portfolio in stocks and 40 percent in bonds by tracking indexes that track the broad U.S. stock and bond markets.
- 5-year return (annualized): 8.3 percent
- Cost ratio: 0.07 percent
- Dividend yield: 1.98 percent
iShares Core Growth Allocation ETF (AOR)
This ETF aims to track the investment results of an index composed of stock and bond funds and is intended as a risk strategy focused on growth allocation. The fund holds approximately 65 percent in equities and 35 percent in bonds.
- 5-year return (annualized): 6.3 percent
- Cost ratio: 0.15 percent
- Dividend yield: 2.51 percent
Fidelity Balanced Fund (FBALX)
The Fidelity Balanced Fund is an investment fund that seeks income and capital growth while taking a reasonable risk. The fund holds approximately 60 percent in equities and 40 percent in bonds and other debt securities.
- 5-year return (annualized): 11.0 percent
- Cost ratio: 0.47 percent
- Dividend yield: 1.56 percent
SPDR SSGA Global Allocation ETF (GAL)
This ETF invests in a mix of exchange-traded funds and generally has at least 30 percent of its assets in countries outside the US. The portfolio typically has about 60 percent of its assets in stocks, but the percentage can vary.
- 5-year return (annualized): 6.3 percent
- Cost ratio: 0.35 percent
- Dividend yield: 2.62 percent
American funds American Balanced F3 (AFMBX)
This investment fund invests in a diversified portfolio of quality stocks and bonds, typically holding between 50 and 75 percent of its assets in equities. The fixed income allocation generally invests in investment grade bonds.
- 5-year return (annualized): 8.5 percent
- Cost ratio: 0.25 percent
- Dividend yield: 2.6 percent
iShares Core Aggressive Allocation ETF (AOA)
This ETF aims to track the investment results of an index composed of stock and bond funds and is intended as an aggressive risk allocation strategy. The fund holds approximately 80 percent in equities and 20 percent in bonds.
- 5-year return (annualized): 8.2 percent
- Cost ratio: 0.15 percent
- Dividend yield: 2.2 percent
iShares Core Moderate Allocation ETF (AOM)
This ETF aims to track the investment performance of an index composed of stock and bond funds and is intended to provide a moderate target risk allocation strategy. The fund holds approximately 40 percent in equities and 60 percent in bonds.
- 5-year return (annualized): 4.3 percent
- Cost ratio: 0.15 percent
- Dividend yield: 2.8 percent
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
