Investors seeking capital appreciation accompanied by a steady income flow from a secure investment would do well to consider balanced funds. By combining the benefits of both stocks and bonds, this category of funds ensures that gains from equity markets are accompanied with relatively low levels of volatility. This allows investors to harness the benefits of a market upswing while protecting invested capital during tough periods. Many funds in this category vary the combination of equity, debt and money market instruments in keeping with market conditions to further enhance these unique benefits.Below we will share with you 5 top rated balanced funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all balanced funds, thenclick here.
Thrivent Balanced A (AABFX) seeks to provide both long term capital appreciation and a steady income flow. Up to 35-75% of its stocks are invested in common stocks, 25-50% in fixed-income securities and up to 40% in money market instruments. The fund returned 21.19% in the last one year and has a five year annualized return of 2.61%.
The balanced fund has a minimum initial investment of $1,000 and an expense ratio of 1.23% compared to a category average of 1.02%.
Lord Abbett Diversified Income Strategy A (ISFAX) invests in a weighted combination of funds that are managed by the fund’s advisor. A wide variety of equity, debt and money market instruments constitute the major holdings of the underlying funds. This balanced fund has a three year annualized return of 2.41%.
Robert E. Gerber is the fund manager and has managed this balanced fund since 2005.
Cavanal Hill Balanced (APBAX) seeks capital appreciation and current income. Equity securities constitute between 50-75% of its assets. At least 25% of its assets are used to purchase equity securities which are rated highly by a renowned ratings firm. The fund returned 18.2% in the last one year period.
As of March 2010, this balanced fund held 396 issues, with 4.75% of its total assets invested in iShares MSCI EAFE Index.
Legg Mason Lifestyle Allocation 50% A (SBBAX) invests in mutual funds affiliated to Legg Mason. The fund invests equal shares of its funds in equity and fixed-income funds. It seeks both current income and capital appreciation. The balanced fund has a ten year annualized return of 2.52%
The balanced fund has a minimum initial investment of $1,000 and an expense ratio of 1.23% compared to a category average of 1.01%.
Alpine Dynamic Balance(ADBYX) invests in a mix of large cap domestic stocks and fixed income securities of superior quality. It may utilize up to 75% of its assets to purchase fixed-income securities. It seeks capital growth with income as a secondary objective. The fund returned 19.98% over the last one year period.The fund manager is Samuel A. Lieber and he has managed this balanced fund since 2001.
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