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.
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.
Federated MDT Balanced A (QABGX) seeks long term growth of both income and capital. The fund holds a widely diversified portfolio of stocks, bonds, exchange traded funds, foreign securities and synthetic instruments. This balanced mutual fund returned 13.71% over the last one year period.
The balanced mutual fund has a minimum initial investment of $1,500 and an expense ratio of 1.21% compared to a category average of 0.99%.
Weitz Balanced (WBALX) invests 50% to 75% of its assets in common stocks, rights warrants and convertible preferred stock. The fund invests in equity securities regardless of the size of the issuer. Up to 20% of its assets are invested in debt securities rated below investment grade. The balanced mutual fund has a three year annualized return of 6.48%.
The fund manager is Bradley P. Hinton and he has managed this balanced mutual fund since 2003.
Lord Abbett Balanced Strategy A (LABFX) seeks both current income and capital appreciation. The fund invests in a combination of underlying funds which in turn invest in stocks, bonds and money market instruments. This balanced mutual fund returned 14.01% over the last one year period.
The balanced mutual fund has a minimum initial investment of $1,000 and an expense ratio of 0.35% compared to a category average of 0.99%.
Buffalo Balanced (BUFBX) invests in a mix of domestic common and preferred stocks, convertible securities, and debt. The fund’s debt investments may be rated as well as unrated and may include securities rated below investment grade. It invests a minimum of 25% of its total assets in equity and at least 25% in debt at any given time. The balanced mutual fund has a five year annualized return of 5.96%.
As of December 2010, this balanced mutual fund held 57 issues, with 9.44% of its total assets invested in Fidelity Instl MM Fds Government.
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 15.95% over the last one year period.
The fund manager is Michael Landreville and he has managed this balanced mutual fund since 2005.
To view the Zacks Rank and past performance of all balanced mutual funds, then click here.