Balanced funds invest primarily in equities and fixed income securities, shifting assets among stocks, bonds and money market instruments depending on current market conditions. Balanced funds are intended to provide a balanced mixture of safety, income and capital appreciation. Balanced mutual funds are affected by interest rate changes, stock market performance, and economic outlook.
Another similar fund would be an asset allocation fund, which maintains comparable objectives to balanced funds, but which typically do not hold a specified percentage of any asset class. In asset allocation funds, the portfolio manager is usually free to hold whichever assets, in whatever amounts he or she determines may best benefit from current and future market trends.
Balanced funds may be appropriate for investors seeking a more diversified portfolio by investing in one fund.