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4 Balanced Mutual Funds to Traverse Troubled Waters
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As the U.S economy is reeling under the effects of four-decade high inflation and braces for a looming economic downturn, investors are looking for an investment strategy wherein they can generate a steady flow of income while minimizing risk. Informed and educated diversification is the order of the day, and maintaining a balance between debt and equity segments to ensure capital appreciation in the near term alongside a safety net against risks has become a priority.
Investors, thus, should invest in balanced mutual funds as it helps in spreading your money across a diversified portfolio of stocks and bonds. This reduces the risk element in a portfolio, alongside providing higher returns than pure fixed-income investments. Balanced mutual funds are broadly of two types, equity-oriented balanced funds and debt-oriented balanced funds. However, they are extremely flexible in managing in accordance with market volatility. When the market is on an upswing, investment focus is on the equities side to milk the market, and during a downturn, fund managers concentrate on bonds to ensure stability and reduce risk. Thereby, these funds harness the strengths of both classes of investments.
In summary, balanced funds provide a much-required canopy when things get too hot and maximize income in good times because of the inherent nature of their diversification.
Hence, with the recession looming large in the U.S economy, astute investors should invest in balanced mutual funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected four such balanced mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
American Century Strategic Allocation: Aggressive Fund (AAAUX - Free Report) usually invests 79% of its net assets in stocks, 20% in bonds and 1% in cash equivalents. AAAUX also invests in a variety of debt securities payable in U.S. and foreign currencies, that meet certain fundamental and technical standards.
Currently 14.8% of AAAUX is invested in large-cap growth stocks, 33.3% in large-cap value stocks, and 11.4% in foreign bonds. Scott A. Wilson has been the lead manager of AAAUX since Mar 31, 2011.
AAAUX’s 3-year and 5-year annualized returns are 11.3% and 8.9%, respectively. Its net expense ratio is 0.27% compared to the category average of 0.71%. AAAUX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
American Funds Moderate Growth and Income Portfolio Class A (BLPAX - Free Report) seeks to generate current income and long-term growth of capital by investing in growth, growth-and-income, equity-income, balanced and fixed income funds. BLPAX usually invests at least 45% of the value of its net assets in common stocks and other equity investments and 25% in bonds and other debt securities.
Currently, 39% of its portfolio is invested in large-cap value stocks and 18.3% in intermediate bonds. Wesley K. Phoa has been the lead manager of BLPAX since May 17, 2012.
BLPAX’s 3-year and 5-year annualized returns are 9.2% and 7.4%, respectively. Its net expense ratio is 0.34% compared to the category average of 0.84%. BLPAX has a Zacks Mutual Fund Rank #2.
Columbia Balanced Fund (CBALX - Free Report) seeks to invest in equity and debt securities based on their relative risk and return. CBALX usually invests between 35% and 65% in each asset class, but not less than 25% or more than 75% in any of them.
Currently, 34.6% of the portfolio is invested in large-cap growth stocks, 34.4% in large-cap value stocks, and the balance 29% in intermediate bonds. Ronald J. Stahl has been the lead manager of CBALX since Mar 17, 2005.
CBALX’s 3-year and 5-year annualized returns are 11% and 8.5%, respectively. Its net expense ratio is 0.67% compared to the category average of 0.84%. CBALX has a Zacks Mutual Fund Rank #2.
Fidelity Advisor Balanced Fund Class A (FABLX - Free Report) seeks income and growth of capital by investing in approximately 60% of assets in stocks and other equity securities and the remainder in bonds and other debt securities, including lower-quality debt securities.
Currently, 34.1% of FABLX is invested in large-cap growth stocks, 37.5% in large-cap value stocks, and 21.4% in intermediate bonds. Douglas E. Simmons has been the lead manager of FABLX since Sep 15, 2008.
FABLX’s 3-year and 5-year annualized returns are 12.6% and 9.8%, respectively. Its net expense ratio is 0.81% compared to the category average of 0.84%. FABLX has a Zacks Mutual Fund Rank #1.
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4 Balanced Mutual Funds to Traverse Troubled Waters
As the U.S economy is reeling under the effects of four-decade high inflation and braces for a looming economic downturn, investors are looking for an investment strategy wherein they can generate a steady flow of income while minimizing risk. Informed and educated diversification is the order of the day, and maintaining a balance between debt and equity segments to ensure capital appreciation in the near term alongside a safety net against risks has become a priority.
Investors, thus, should invest in balanced mutual funds as it helps in spreading your money across a diversified portfolio of stocks and bonds. This reduces the risk element in a portfolio, alongside providing higher returns than pure fixed-income investments. Balanced mutual funds are broadly of two types, equity-oriented balanced funds and debt-oriented balanced funds. However, they are extremely flexible in managing in accordance with market volatility. When the market is on an upswing, investment focus is on the equities side to milk the market, and during a downturn, fund managers concentrate on bonds to ensure stability and reduce risk. Thereby, these funds harness the strengths of both classes of investments.
In summary, balanced funds provide a much-required canopy when things get too hot and maximize income in good times because of the inherent nature of their diversification.
Hence, with the recession looming large in the U.S economy, astute investors should invest in balanced mutual funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected four such balanced mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
American Century Strategic Allocation: Aggressive Fund (AAAUX - Free Report) usually invests 79% of its net assets in stocks, 20% in bonds and 1% in cash equivalents. AAAUX also invests in a variety of debt securities payable in U.S. and foreign currencies, that meet certain fundamental and technical standards.
Currently 14.8% of AAAUX is invested in large-cap growth stocks, 33.3% in large-cap value stocks, and 11.4% in foreign bonds. Scott A. Wilson has been the lead manager of AAAUX since Mar 31, 2011.
AAAUX’s 3-year and 5-year annualized returns are 11.3% and 8.9%, respectively. Its net expense ratio is 0.27% compared to the category average of 0.71%. AAAUX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
American Funds Moderate Growth and Income Portfolio Class A (BLPAX - Free Report) seeks to generate current income and long-term growth of capital by investing in growth, growth-and-income, equity-income, balanced and fixed income funds. BLPAX usually invests at least 45% of the value of its net assets in common stocks and other equity investments and 25% in bonds and other debt securities.
Currently, 39% of its portfolio is invested in large-cap value stocks and 18.3% in intermediate bonds. Wesley K. Phoa has been the lead manager of BLPAX since May 17, 2012.
BLPAX’s 3-year and 5-year annualized returns are 9.2% and 7.4%, respectively. Its net expense ratio is 0.34% compared to the category average of 0.84%. BLPAX has a Zacks Mutual Fund Rank #2.
Columbia Balanced Fund (CBALX - Free Report) seeks to invest in equity and debt securities based on their relative risk and return. CBALX usually invests between 35% and 65% in each asset class, but not less than 25% or more than 75% in any of them.
Currently, 34.6% of the portfolio is invested in large-cap growth stocks, 34.4% in large-cap value stocks, and the balance 29% in intermediate bonds. Ronald J. Stahl has been the lead manager of CBALX since Mar 17, 2005.
CBALX’s 3-year and 5-year annualized returns are 11% and 8.5%, respectively. Its net expense ratio is 0.67% compared to the category average of 0.84%. CBALX has a Zacks Mutual Fund Rank #2.
Fidelity Advisor Balanced Fund Class A (FABLX - Free Report) seeks income and growth of capital by investing in approximately 60% of assets in stocks and other equity securities and the remainder in bonds and other debt securities, including lower-quality debt securities.
Currently, 34.1% of FABLX is invested in large-cap growth stocks, 37.5% in large-cap value stocks, and 21.4% in intermediate bonds. Douglas E. Simmons has been the lead manager of FABLX since Sep 15, 2008.
FABLX’s 3-year and 5-year annualized returns are 12.6% and 9.8%, respectively. Its net expense ratio is 0.81% compared to the category average of 0.84%. FABLX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>