By creating a diversified portfolio of both stocks and bonds, balanced funds ensure that they harness the inherent strengths of both classes of instruments. Most of the competently managed funds in this category keep the proportion of assets invested in different asset classes flexible and make adjustments in keeping with prevailing market conditions. This ensures that fixed-income securities protect the portfolio from losses during a downturn while equity securities harness maximum gains from a rising market. This category of funds could be an excellent choice for investors seeking both capital growth and steady income.
Below we will share with you 5 top rated balanced mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future.
Wells Fargo Advantage Growth Balanced (NVGBX) seeks total return, both current income and capital appreciation. It invests in both equity master and fixed-income portfolios, concentrating on equity portfolios. It utilizes 65% of its assets to purchase equity and 35% to purchase assets in debt securities. The balanced mutual fund returned 13.89% in the last one year period.
The balanced mutual fund has an expense ratio of 0.95% compared to a category average of 1.01%.
J Hancock Balanced A (SVBAX) invests in a well diversified portfolio of equity and debt securities. At least 25% of its assets are invested in equity securities and not more than 25% is used to purchase senior debt securities. The balanced mutual fund has a five year annualized return of 7.68%.
The balanced mutual fund manager is Roger C. Hamilton and he has managed this balanced fund since 2003.
Thrivent Balanced A (AABFX) seeks to provide both long term capital appreciation and a steady income flow. Up to 35-75% of its stocks are invested in common stocks, 25-50% in fixed-income securities and up to 40% in money market instruments. This balanced mutual fund returned 15.55% over the last one year period.
As of November 2010, this balanced mutual fund held 270 issues, with 4.40% of its total assets invested in FHLBA.
State Farm Balanced (STFBX) invests 60% to 75% of its assets in common stocks. At least 25% of its assets are used to purchase fixed income securities. This includes preferred stock and debt securities with longer maturity periods; rated investment grade. The balanced mutual fund has a ten year annualized return of 3.93%. The balanced mutual fund has a minimum initial investment of $250 and an expense ratio of 0.14% compared to a category average of 1.01%.
Alpine Dynamic Balance (ADBYX) seeks capital growth. The fund invests in a mix of large cap domestic stocks and fixed income securities of superior quality. It may utilize up to 75% of its assets to purchase fixed-income securities. The balanced mutual fund returned 15.53% over the last one year period.
The balanced mutual fund manager is Samuel A. Lieber and he has managed this balanced fund since 2001.
To view the Zacks Rank and past performance of all balanced mutual funds, then click here.