Balanced funds are mutual funds that invest in a portfolio of common stocks, preferred stocks, and bonds to meet their investment goal of seeking a strong return while moderating risk.
Balanced funds generally produce more income than stock funds, though their total return may be less than stock fund returns in a strong stock market.
In a flat or falling stock market, however, disappointing returns on equity investments may be offset by a stronger performance from a balanced fund's fixed-income investments.
Balanced funds are sometimes described as a type of asset allocation fund, which provides the oportunity to spread your money among asset classes with one investment.
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