3 Best-Rated Balanced Mutual Funds For Your Portfolio

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Includes: ABALX, AMBFX, LABFX
by: Zacks Funds

Investors looking to gain exposure to both equity and fixed income securities may consider 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 raise the share of fixed income securities during a downturn to avoid losses, the share of equity securities may be increased during an upswing. Hence, these funds are expected to harness the inherent strengths of both classes of investments.

Below we share with you three top-rated balanced mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy), and is expected to outperform its peers in the future.

American Funds American Balanced A (MUTF:ABALX) seeks long-term growth of capital. The fund 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, the fund 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. American Funds American Balanced A has a three-year annualized return of 8.5%.

It has an expense ratio of 0.58% compared with the category average of 0.86%.

Lord Abbett Multi-Asset Balanced Opportunity A (MUTF:LABFX) is a "fund-of-funds" that generally invests in affiliated mutual funds managed by Lord, Abbett & Co. LLC. LABFX invests primarily in U.S. equity securities and fixed income securities. The fund applies a blend strategy that helps it to gain exposure to both growth and value stocks. Lord Abbett Multi-Asset Balanced Opportunity A has a three-year annualized return of 5.7%.

Giulio Martini is one of the fund managers and has managed LABFX since 2015.

American Funds American Balanced F2 (MUTF:AMBFX) seeks long-term growth of capital. AMBFX invests in both common stocks and bonds that are rated investment grade. The fund also invests in securities that are issued by the U.S. government and its entities. Moreover, AMBFX may invest in securities of issuers located in foreign lands. Primarily, AMBFX invests in common stocks of companies that are believed to offer dividend income. American Funds American Balanced F2 has a three-year annualized return of 8.7%.

AMBFX has an expense ratio of 0.39%, lower than the category average of 0.86%.

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