Balanced Mutual fund

Traditional investing involves balancing risk with growth or income. In general,

opportunities for high profit come with high risks. A balanced mutual fund tries to walk
the tightrope of high returns with moderate risks.

What Is a Mutual Fund?

A mutual fund pools assets from a number of sources and invests those assets over a
broad range of securities. Investors can range from individuals to large institutional
investors.

Risk :-Balanced mutual funds try to balance risky investments that produce higher growth
with stable investments, such as higher-yield bonds.

Composition :-Balanced mutual funds combine stock and bond investments. Stock
investments can be either common or preferred shares. Balanced funds tend to prefer
high-yield bonds, but also add some common bonds for fund stability.

Capital Growth :-Another goal of a balanced mutual fund is to produce growth of

investor capital. This goal is balanced against income and risk.

Income :-One of the goals of a balanced mutual fund is to produce income for the
investor. This goal is balanced with other fund goals.

Balanced mutual fund :-A Balanced fund is a mutual fund which invests in a balance of
common stock, bonds and preferred stock with an objective of income provision and
some capital appreciation with low risk. So investing in balanced mutual funds provides
the returns of stock market as well as the safety and regular income of bonds. Balanced
mutual funds are also called as 'hybrid funds' or 'asset allocation funds'.

How do you get the returns?

Although mutual funds are better and safer places to invest than the stock market, they
are also subject to the fluctuations of the market. But Balanced funds try to address this
problem and provide a high and stable return.
These funds will invest in many sectors so that the portfolio will be diversified and losses
minimized. Investments in bonds will typically be around 40% of the total money. More
aggressive funds will
allocate even lesser.

The investment in bonds ensures some cushion for the investors' money and provides
safety. At the same time, investors will also get regular income by way of coupon
payments from bonds. These funds invest about 60-65% of their money in stocks.
Sometimes, it my go up to 70% also.
While investing in stocks, they choose the sector that has consistently clocked high
growth over the past few years and invest in securities in those sectors. Asset allocation
within the sector will also be based on fundamentals of the organizations in the
sector.

The top security in the sector may be allocated 10% of the total money and lesser the
potential lesser will be the amount invested and so on. Bonds issued by the government
and banks will mainly form the bond portfolio of these funds. Sometimes, highly rated
corporate bonds and municipal bonds may also be included.