Investors interested in maintaining exposure to both equity and fixed income securities may consider balanced mutual funds. Also, these mutual funds are believed to provide greater returns than pure, fixed income investments, while maintaining a low volatility level.
The proportion of equity and fixed income investments in these funds may also vary in response to market conditions. While managers may increase the share of fixed income securities during a downturn to avoid losses, the share of equity securities may be increased in a bullish market. Hence, these funds are expected to harness the inherent strengths of both classes of investments.
Below we share with you four top-ranked balanced mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of balanced mutual funds.
BlackRock (NYSE:BLK) Tactical Opportunities Investor A PCBAX aims for total returns by majorly investing in bonds, stocks and money market instruments. The fund may invest in common and preferred stocks, depository receipts, non-convertible preferred stocks and securities convertible to common stocks. PCBAX has three and five-year annualized returns of 5.2% and 2.8%, respectively. The minimum initial investment for PCBAX is $1000.
Philip J. Green is one of the fund managers of PCBAX since 2006.
Diamond Hill Corporate Credit A DSIAX aims for high current income that is on par with capital preservation over a period of five years. The fund invests at least 80% of its net assets in a diversified portfolio of corporate debt securities that include securities that are rated investment grade or are below investment grade or unrated ones. DSIAX has three and five-year annualized returns of 8.3% and 5.1%, respectively. The minimum initial investment for DSIAXis $2500.
DSIAX has an expense ratio of 0.90% compared with the category average of 1.02%.
Dreyfus Global Real Return A DRRAX seeks total returns by using an actively managed, multi-asset strategy. The fund mostly invests in instruments that aren’t dependent on market moves. The fund invests in bonds and cash, global equities, and other assets such as commodities, real estate and currencies etc. DRRAXhas three and five-year annualized returns of 2.1% and 2.2%, respectively. The minimum initial investment for DRRAXis $1000.
As of January 2019, DRRAXheld 227 issues, with 16.17% of its assets invested in
United States Treasury Bonds 3.38%.
Fidelity Asset Manager 20% FASIX aims first for a high level of current income first and then for capital appreciation. The fund mainly invests in stocks, bonds and money market instruments. FASIX has three and five-year annualized returns of 4.6% and 3%, respectively. The fund has no minimum initial investment.
FASIX has an expense ratio of 0.52% compared with the category average of 0.69%.
To view the Zacks Rank and past performance of all balanced mutual funds, investors can click here to see the complete list of funds.
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Zacks Investment Research