Investors interested in maintaining exposure to both equity and fixed income securities may consider investing in balanced mutual funds. Also, these mutual funds are believed to provide greater returns than pure, fixed income investments, while maintaining a low volatility level.
The proportion of equity and fixed income investments in these funds may also vary in response to market conditions. While managers may increase the share of fixed income securities during a downturn to avoid losses, the share of equity securities may be increased in a bullish market. Hence, these funds are expected to harness the inherent strengths of both classes of investments.
Below we share with you three top-ranked balanced mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of balanced mutual funds.
American Funds American Balanced A (ABALX - Free Report) seeks capital growth for the long run and capital preservation. ABALX invests in both common stocks and bonds that are rated investment grade and offer dividend income. It also invests in securities that are issued by the U.S. government and its agencies. American Funds American Balanced A has returned 9.5% in the last one year.
ABALX has an expense ratio of 0.57% compared with the category average of 0.91%.
Fidelity Balanced K (FBAKX - Free Report) invests around 60% of its assets in various equity securities and nearly 40% of its assets in different debt securities, including bonds. FBAKX seeks growth of income and capital constant with reasonable risk. The fund also invests more than one-fifth of its assets in fixed-income senior securities. Fidelity Balanced K has returned 11.4% in the last one year.
As of May 2018, FBAKX held 1725 issues, with 2.00% of its assets invested in Microsoft Corp.
Thrivent Balanced Income Plus S (IBBFX - Free Report) seeks high level of return through generation of income and growth of capital for the long run. IBBFX invests around 25-75% of its assets in equity securities and about 25-75% of its assets in debt securities. The fund advisor normally tends to invest in REITs. Thrivent Balanced Income Plus Shas returned 6.7% in the last one year.
Stephen D. Lowe is one of the fund managers of IBBFX since 2013.
To view the Zacks Rank and past performance of all balanced mutual funds, investors can click here to see the complete list of funds.
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 >>