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Finance Dictionary and Glossary of Investment Terms
A mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. Also known as an asset allocation fund.
A mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds, to provide both income and capital appreciation while avoiding excessive risk. The purpose of balanced funds (also sometimes called hybrid funds) is to provide investors with a single mutual fund that combines both growth and income objectives, by investing in both stocks (for growth) and bonds (for income). Such diversified holdings ensure that these funds will manage downturns in the stock market without too much of a loss; the flip side, of course, is that balanced funds will usually increase less than an all-stock fund during a bull market.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
A mutual fund that invests in some mix of stocks and bonds. A good balanced fund offers the advantage of one-stop shopping; it handles asset allocation and mixes equities with fixed income securities. The knock on these is that you don''t get to determine your own asset allocation, and there is considerable evidence that asset allocation is the most important factor in portfolio returns. Instead of a balanced fund, for instance, you could choose a good equity fund and a good bond fund and then decide your own proportions.