Balanced funds provide investors with the convenience of buying into a single fund rather than 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 three top-rated balanced mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (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.
Hartford Balanced Income Fund A (MUTF:HBLAX) invests around 45% of its assets in equity securities and 55% in fixed-income securities. It invests mostly in common stocks of companies that have a history of above-average dividends or expectations of increasing dividends. HBLAX may invest a maximum 20% of its fixed-income portion of the portfolio in domestic non-investment grade debt. The fund has a three-year annualized return of 7.4%.
As of May 2016, HBLAX held 1475 issues, with 6.19% of its assets invested in Us 5yr Note (Cbt) Sep16 Xcbt 20160930.
American Funds American Balanced Fund A (MUTF:ABALX) seeks long-term growth of capital. It invests in both common stocks and bonds that are rated investment-grade. It also invests in securities that are issued by the U.S. government and its entities. Moreover, ABALX may invest in securities of issuers located in foreign lands. The fund primarily invests in common stocks of companies that are believed to provide dividend income. The fund has a three-year annualized return of 9%.
ABALX has an expense ratio of 0.58% compared with the category average of 0.85%.
Eaton Vance Balanced Fund A (MUTF:EVIFX) invests its assets in common stocks and fixed-income securities. It invests in two other registered investment companies managed by Eaton Vance Management. It invests 50-75% of its assets in equity securities and 25-50% of its assets in fixed-income securities by investing in Core Bond Portfolio. The fund has a three-year annualized return of 9.4%.
As of April 2016, EVIFX held 382 issues, with 3.25% of its assets invested in US Treasury Note 3.5%.