Tuesday, December 15, 2009

Balanced Funds

The objective of these funds is to provide a "balanced" mixture of safety, income,
and capital appreciation. The strategy of balanced funds is to invest in a combination
of fixed-income and equities. A typical balanced fund might have a weighting of 60%
equity and 40% fixed-income. The weighting might also be restricted to a specified
maximum or minimum for each asset class.
A similar type of fund is known as an asset allocation fund. Objectives are similar to
those of a balanced fund, but these kinds of funds typically do not have to hold a
specified percentage of any asset class. The portfolio manager is therefore given
freedom to switch the ratio of asset classes as the economy moves through the
business cycle.

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