Investors seeking to combine the benefits of both stocks and bonds would do well to consider balanced funds which invest in a diversified portfolio of both equity and debt instruments. These funds provide both income and capital appreciation. The better managed funds in this category keep the proportion of assets invested in different asset classes flexible and make changes according to market conditions. This enables balanced funds to make the most of market upswings while protecting capital invested during a downturn.
Below we will share with you 5 top rated balanced funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all balanced funds, then click here.
J Hancock Balanced A (SVBAX) seeks current income and capital appreciation over the long term. It invests in a wide range 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 fund focuses on domestic financial instruments, but may invest up to 35% of its assets in foreign securities. The fund has a five year annualized return of 8.04%. The fund has an expense ratio of 1.18% compared to a category average of 1.02%.
Buffalo Balanced (BUFBX) invests in a mix of stocks, convertible securities, and debt. Its debt investments may be rated as well as unrated and may include securities rated below investment grade. The fund has a ten year annualized return of 4.62%.
As of December 2009, this balanced fund held 53 issues, with 9.73% of its total assets invested in Fidelity Institutional Money Market Funds Government I.
Wells Fargo Advantage WealthBuilder Growth Balanced (WBGBX) seeks both current income and capital growth. It invests 62% of its assets in equity funds, 33% in bond funds and only 10% in alternative strategy funds. These underlying funds may be both affiliated and non-affiliated. The fund returned 35.77% over the last one year period.
The fund manager is Galen G Blomster and he has managed this balanced fund since 1997.
Lord Abbett Balanced Strategy A (LABFX) invests in a combination of underlying funds which in turn invest in stocks, bonds and money market instruments. The securities held by these funds include common and preferred stocks, high-yield debt securities and money market instruments. The fund returned 34.92% in 2009 and has a ten year annualized return of 4.13%.
The balanced fund has a minimum initial investment of $1000 and an expense ratio of 1.10% compared to a category average of 1.02%.
Thrivent Balanced Fund 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 fund returned 33.46% over the last one year period.
Gregory R. Anderson is the fund manager and he has managed this balanced fund since 2005.
To view the Zacks Rank and past performance of all balanced funds, then click here.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/