What Is a Balanced Fund?

A balanced fund is a type of mutual fund that usually includes both stocks and bonds. Mutual funds are a collection of securities that investors can buy. Balanced funds typically maintain a set allocation of stocks and bonds, like 70% stocks and 30% bonds. Bonds are financial instruments that generally provide a consistent, fixed return rate.

Balanced mutual funds aim to provide a mix of growth and income, making them suitable for investors seeking safety, income, and some capital appreciation.

Learn more about Balanced Fund

A balanced fund is a hybrid fund that diversifies investments among different asset classes. The fund typically has specific limits on the amount invested in each asset class. It is also known as an asset allocation fund.

Balanced funds keep the same asset mix, while life-cycle funds adjust holdings as retirement nears. They also differ from actively managed funds, which may change based on investor preferences or market conditions.


  • Diversified, constantly rebalanced portfolio
  • Low expense ratios
  • Less volatility
  • Low-risk


  • Fixed asset allocations
  • Unsuited for tax-shielding strategies
  • “The usual suspects” investments
  • Safe but stodgy returns


The Morningstar risk rating for the Vanguard Balanced Index Fund Admiral Shares (VBIAX) is below average, but it offers an above-average reward profile. This fund has a 60% allocation to stocks and 40% allocation to bonds. From April 30, 2012, to April 30, 2022, it has provided an annual return of 8.73%. The expense ratio for this fund is 0.07%, and the minimum investment amount is $3,000.


A balanced fund is right for you depends on your individual investment goals and risk tolerance. Consider consulting with a financial advisor to determine the appropriate asset allocation for your situation.