Balanced funds provide investors with the convenience of buying into a single fund rather holding both equity and bond funds. This category of funds also reduces a portfolio’s volatility while providing higher returns than pure fixed income investments. Fund managers of such funds also enjoy the flexibility of varying the proportion of equity and fixed income investments in response to market conditions. An upswing may prompt them to hold a relatively higher share of equity in order to maximize gains; whereas a downturn sees them turning to fixed income investments to stem losses.
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. To view the Zacks Rank and past performance of all balanced funds, investors can click here to see the complete list of funds.
Franklin Balanced A (FBLAX) invests in dividend yielding stocks, debt securities and convertible instruments. A minimum of 25% of its assets are invested in debt securities. It aims to invest a maximum of 15% of its assets in foreign securities. This balanced mutual fund returned 8.74% over the last one year period.
Edward Perks is the fund manager and has managed this balanced mutual fund since 2006.
Fairholme Allocation (FAAFX) seeks total return over the long term. It invests in a portfolio of investments in fixed income, equity or cash and cash equivalent asset classes. The fund may allocate any amount to these asset classes. Investments may be parked in any, all or none of these asset classes. This balanced mutual fund returned 27.35% over the last one year period.
This non-diversified fund has an expense ratio of 0.92% as compared to category average of 1.24%.
Calvert Aggressive Allocation A (CAAAX) is a fund of funds that invests in a number of Calvert fixed-income, equity and money market funds. The fund seeks long-term capital growth and invests in keeping with the established target asset allocation. This balanced mutual fund returned 17.49% over the last one year period.
As of December 2013, this fund held 10 issues with 22.31% of its total assets invested in Calvert Equity I.
AllianceBern Real Asset Strategy A (AMTAX) invests its assets in inflation-protected fixed income securities. It invests in foreign securities which are linked directly to other assets and currencies. The fund invests in TIPS, equity securities and derivatives. This non-diversified balanced mutual fund has returned -4.47% over the last one year period.
The mutual fund has an expense ratio of 1.05% as compared to category average of 1.11%.
Federated Capital Income A (CAPAX) invests in fixed income and equity securities which have the potential to provide high levels of income. Among equity securities, the fund selects prominent mid to large cap value stocks. It also purchases securities which provide high dividends which are expected to increase in the future. This balanced mutual fund returned 8.66% over the last one year period.
John Nichol is the fund manager and has managed the fund since 2000.
To view the Zacks Rank and past performance of all balanced mutual funds, investors can click here to see the complete list of funds.
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.
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