Balanced Funds
Balanced funds invest across more than one asset class, typically combining equities and bonds within a single fund. The mix of investments is managed in line with the fund’s stated investment objective and may be fixed or adjusted over time.
By combining assets with different characteristics, balanced funds can provide diversification across asset classes. Depending on the fund’s strategy, it may seek capital growth, income or a combination of both. Diversification can help spread investment risk but does not eliminate the possibility of loss.
Understanding Balanced Fund Risk
The risks associated with a balanced fund depend on the assets in which it invests and how the portfolio is allocated. The fund may be exposed to equity, bond, interest rate, credit, currency and other market risks.
Diversification across different asset classes can help spread risk, but it does not prevent the value of the fund from falling.
Key Features of Balanced Funds
Multi-Asset Diversification
Invests across different asset classes, typically including equities and bonds within a single fund.
Professional Management
The fund manager oversees the portfolio and manages the mix of investments in line with the fund’s objectives.
Managed Asset Allocation
The proportion invested in each asset class is managed according to the fund’s investment strategy.
Growth and Income Potential
Combines assets that may provide capital growth with investments that may generate income.
Range of Investment Approaches
Different funds may place greater emphasis on growth, income or capital preservation.
Diversification Across Asset Classes
Spreading investments across asset classes can reduce reliance on the performance of any one type of investment.
Balanced Fund Strategies
Growth-Focused
Typically holds a higher proportion of equities, with greater emphasis on long-term capital growth.
Income-Focused
Typically holds a higher proportion of income-producing investments, such as bonds, with greater emphasis on generating income.
Flexible Allocation
Allows the fund manager to adjust the mix of asset classes in response to the fund’s strategy and changing market conditions.
