UK Accounting Glossary
A balanced fund is a mutual fund that invests in stocks, bonds, and money market investments (cash). The proportion of investments varies by the balanced fund, but the investment goals are similar: to conserve principal, provide a source of income, and provide a level of long-term growth. Thus, a balanced fund must strive to meet more than one investment objective. The stocks in a balanced fund provide growth while bonds provide income and conservation of principal. A balanced fund has a fairly low-risk level due to the varying risk levels of its stocks, bonds, and cash. However, the trade-off is that the balanced fund will not be a stellar performer: its stocks are generally those of larger companies that are not very volatile. The balanced fund is often the mutual fund of choice among the risk-averse.
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This glossary post was last updated: 4th February 2020.