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3 Balanced Mutual Funds to Buy as Inflation Stays Elevated
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Volatility in the U.S. financial markets continues. This is evident from the rise in the annual Consumer Price Index (CPI) for the month of March, following the trend of the last couple of months. Investors are concerned about the Fed's reactions to higher-than-expected CPI data and a strong labor market. Though the Federal Reserve’s chairman, Jerome Powell, reiterated multiple rates cut this year, the current situation undermines such a possibility in the near future.
The CPI, which is the most accepted gauge for inflation, saw the biggest rise in the past six months. Deviating far from the Federal Reserve’s ambitious target of 2%, inflation for the month of March rose to 3.5% year on year, mostly due to a rise in the cost of gasoline and shelter.
The jobs market report for the month of March also suggests a strong labor market. Nonfarm payroll employment rose by 303,000, against the street expectation of 195,000. The unemployment rate has changed marginally by 3.8% month over month, and the average hourly wage rate has increased 0.3%, in line with expectations.
Though investors are expecting the central bank to be less hawkish this year, rising inflation and a strong labor market could prompt the Fed to adopt a more cautious approach regarding its upcoming interest rate decision.
Keeping in mind that the Fed can keep the interest rate high for longer to counter the rising inflation numbers, prudent investors can invest or park their money in balanced funds, otherwise known as hybrid funds, to balance their portfolio if the market goes south. These funds usually invest in equity and debt instruments in various proportions, depending upon the market conditions. The primary aim of these funds is to provide investors with a stable return, having a balance between risk and capital appreciation. Also, these mutual funds are believed to provide higher returns than pure, fixed-income investments.
Thus, from an investment standpoint, we have highlighted three balanced mutual funds that are expected to give a positive return and preserve capital. 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).
These funds, by the way, have given impressive 3-year and 5-year returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000, and carry an expense ratio of less than 1%.
State Farm Balanced Fund (STFBX - Free Report) invests most of its net assets in equity securities of preferably large and medium-cap companies. STFBX advisors consider large and medium-cap companies as defined by S&P Dow Jones Indices at the time of investment.
Christine Tinker has been the lead manager of STFBX since Mar 30, 2021. Most of the fund’s holdings were in companies like Apple (8.4%), Walt Disney (3.5%) and Caterpillar (3.4%) as of Dec 31, 2023.
STFBX’s three-year and five-year returns are 7.3% and 10.5%, respectively. STFBX has an annual expense ratio of 0.14%.
Fidelity Balanced (FBALX - Free Report) invests most of its net assets in a portfolio consisting of equity securities, bonds, and other debt securities, includinglower-quality debt securities and junk bonds. FBALX advisors also invest a small portion of their assets in fixed-income senior securities.
Steven Kaye has been the lead manager of FBALX since Sep 29, 2008. Most of the fund’s holdings were in companies like Microsoft (5.4%), Apple (3.7%) and Amzon.com (2.7%) as of Nov 30, 2023.
FBALX’s three-year and five-year returns are 6.5% and 11.7%, respectively. FBALX has an annual expense ratio of 0.50%.
Hartford Balanced HLS IA (HADAX - Free Report) invests most of its net assets in equity securities of large-cap domestic and foreign companies with market capitalizations similar to those companies listed on the S&P 500 Index. HADAX advisors also invest in debt securities and cash instruments.
Matthew C Hand has been the lead manager of HADAX since Apr 30, 2020. Most of the fund’s holdings were in companies like Microsoft (5.7%), Alphabet (3.5%) and UnitedHealth Group (1.9%) as of Dec 31, 2023.
HADAX’s three-year and five-year returns are 5.8% and 9.4%, respectively. HADAX has an annual expense ratio of 0.63%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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3 Balanced Mutual Funds to Buy as Inflation Stays Elevated
Volatility in the U.S. financial markets continues. This is evident from the rise in the annual Consumer Price Index (CPI) for the month of March, following the trend of the last couple of months. Investors are concerned about the Fed's reactions to higher-than-expected CPI data and a strong labor market. Though the Federal Reserve’s chairman, Jerome Powell, reiterated multiple rates cut this year, the current situation undermines such a possibility in the near future.
The CPI, which is the most accepted gauge for inflation, saw the biggest rise in the past six months. Deviating far from the Federal Reserve’s ambitious target of 2%, inflation for the month of March rose to 3.5% year on year, mostly due to a rise in the cost of gasoline and shelter.
The jobs market report for the month of March also suggests a strong labor market. Nonfarm payroll employment rose by 303,000, against the street expectation of 195,000. The unemployment rate has changed marginally by 3.8% month over month, and the average hourly wage rate has increased 0.3%, in line with expectations.
Though investors are expecting the central bank to be less hawkish this year, rising inflation and a strong labor market could prompt the Fed to adopt a more cautious approach regarding its upcoming interest rate decision.
Keeping in mind that the Fed can keep the interest rate high for longer to counter the rising inflation numbers, prudent investors can invest or park their money in balanced funds, otherwise known as hybrid funds, to balance their portfolio if the market goes south. These funds usually invest in equity and debt instruments in various proportions, depending upon the market conditions. The primary aim of these funds is to provide investors with a stable return, having a balance between risk and capital appreciation. Also, these mutual funds are believed to provide higher returns than pure, fixed-income investments.
Thus, from an investment standpoint, we have highlighted three balanced mutual funds that are expected to give a positive return and preserve capital. 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).
These funds, by the way, have given impressive 3-year and 5-year returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy), offer a minimum initial investment within $5,000, and carry an expense ratio of less than 1%.
State Farm Balanced Fund (STFBX - Free Report) invests most of its net assets in equity securities of preferably large and medium-cap companies. STFBX advisors consider large and medium-cap companies as defined by S&P Dow Jones Indices at the time of investment.
Christine Tinker has been the lead manager of STFBX since Mar 30, 2021. Most of the fund’s holdings were in companies like Apple (8.4%), Walt Disney (3.5%) and Caterpillar (3.4%) as of Dec 31, 2023.
STFBX’s three-year and five-year returns are 7.3% and 10.5%, respectively. STFBX has an annual expense ratio of 0.14%.
Fidelity Balanced (FBALX - Free Report) invests most of its net assets in a portfolio consisting of equity securities, bonds, and other debt securities, includinglower-quality debt securities and junk bonds. FBALX advisors also invest a small portion of their assets in fixed-income senior securities.
Steven Kaye has been the lead manager of FBALX since Sep 29, 2008. Most of the fund’s holdings were in companies like Microsoft (5.4%), Apple (3.7%) and Amzon.com (2.7%) as of Nov 30, 2023.
FBALX’s three-year and five-year returns are 6.5% and 11.7%, respectively. FBALX has an annual expense ratio of 0.50%.
Hartford Balanced HLS IA (HADAX - Free Report) invests most of its net assets in equity securities of large-cap domestic and foreign companies with market capitalizations similar to those companies listed on the S&P 500 Index. HADAX advisors also invest in debt securities and cash instruments.
Matthew C Hand has been the lead manager of HADAX since Apr 30, 2020. Most of the fund’s holdings were in companies like Microsoft (5.7%), Alphabet (3.5%) and UnitedHealth Group (1.9%) as of Dec 31, 2023.
HADAX’s three-year and five-year returns are 5.8% and 9.4%, respectively. HADAX has an annual expense ratio of 0.63%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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 >>