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Balanced funds are popular with investors who are looking for a combination of growth and income from their portfolio. The funds hold a combination of stocks and bonds and tend to be less volatile than funds that only hold stocks.
Here’s what to know about balanced funds and some of the top balanced ETFs and mutual funds to consider for your portfolio.
What are balanced funds?
Balanced funds hold a combination of stocks and bonds and try to achieve both growth and income goals for their investors. Balanced funds might have 60 percent of their assets invested in stocks, with the other 40 percent invested in bonds. Allocations can vary by the fund’s strategy.
Balanced funds come as 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 throughout the day on an exchange like stocks do.
Balanced funds offer a diversified portfolio to investors that is likely to be less volatile than a fund that only holds stocks. A balanced fund will also provide more growth than a bond-only fund because it has exposure to stocks. It is truly a balanced portfolio strategy.
One downside of using balanced funds is that you don’t control the fund’s asset allocation, so if a 60/40 portfolio doesn’t fit your needs, for example, you may need to find a different strategy.
Top balanced ETFs and mutual funds for your portfolio
*Data as of April 12, 2024.
Vanguard Balanced Index Fund Admiral Shares (VBIAX)
This mutual fund gives investors a balanced fund at a very low cost. 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 returns (annualized): 8.3 percent
- Expense 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 made up of stock and bond funds that is intended to represent a growth allocation target risk strategy. The fund holds roughly 65 percent in stocks and 35 percent in bonds.
- 5-year returns (annualized): 6.3 percent
- Expense ratio: 0.15 percent
- Dividend yield: 2.51 percent
Fidelity Balanced Fund (FBALX)
The Fidelity Balanced Fund is a mutual fund that seeks income and capital growth with taking reasonable risk. The fund holds about 60 percent in equity securities and 40 percent in bonds and other debt securities.
- 5-year returns (annualized): 11.0 percent
- Expense 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 U.S. The portfolio typically has about 60 percent of its assets in equity securities, but the percentage can vary.
- 5-year returns (annualized): 6.3 percent
- Expense ratio: 0.35 percent
- Dividend yield: 2.62 percent
American Funds American Balanced F3 (AFMBX)
This mutual fund invests in a diversified portfolio of quality stocks and bonds, typically holding between 50 percent and 75 percent of its assets in equities. The fixed income allocation generally invests in investment-grade bonds.
- 5-year returns (annualized): 8.5 percent
- Expense 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 made up of stock and bond funds that is intended to represent an aggressive target risk allocation strategy. The fund holds roughly 80 percent in stocks and 20 percent in bonds.
- 5-year returns (annualized): 8.2 percent
- Expense ratio: 0.15 percent
- Dividend yield: 2.2 percent
iShares Core Moderate Allocation ETF (AOM)
This ETF aims to track the investment results of an index made up of stock and bond funds that is intended to represent a moderate target risk allocation strategy. The fund holds roughly 40 percent in stocks and 60 percent in bonds.
- 5-year returns (annualized): 4.3 percent
- Expense 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 an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
