By creating a diversified portfolio of both stocks and bonds, balanced funds ensure that they harness the inherent strengths of both classes of instruments. Most of the competently managed funds in this category keep the proportion of assets invested in different asset classes flexible and make adjustments in keeping with prevailing market conditions. This ensures that fixed-income securities protect the portfolio from losses during a downturn while equity securities harness maximum gains from a rising market.
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.
Putnam Capital Spectrum A (PVSAX - Free Report) invests a large share of its assets in equity securities and fixed income instruments. It also invests in bank loans of leveraged US firms. It may invest in both growth and value stocks of domestic firms with significant leverage. The balanced mutual fund is non-diversified and has returned 30.73% over the last one year period.
The fund has an expense ratio of 1.27% as compared to category average of 1.19%.
Fairholme Allocation (FAAFX - Free Report) 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 30.31% over the last one year period.
Bruce R. Berkowitz is the fund manager and has managed this fund since 2010.
AllianceBern Real Asset Strategy A (AMTAX - Free Report) 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 -0.58% over the last one year period.
As of January 2014, this fund held 586 issues with 15.71% of its assets invested in US Treasury TIP.
Prudential Growth Allocation A seeks capital growth over the long term. It is a fund of funds and invests in mutual funds under the Prudential Investments fund family. Almost 90% is invested in underlying funds that in turn invest in fixed-income securities. Though it is a non-diversified, it may invest in diversified underlying holdings. The fund has returned 17.00% over the last one year period.
The fund has an expense ratio of 0.75% as compared to category average of 0.89%.
Federated Capital Income A (CAPAX - Free Report) 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 9.53% 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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