Balance funds combine some of the traits of equity and bond funds in a single portfolio; providing both relative stability of bonds and comparative capital growth ability of stocks. Balanced funds are designed to provide a balanced of medium to long term capital appreciation, with a proportion of annual income. This is achieved through an asset mix of 60% equities and 40% bond/money market instruments.
While most balanced funds have common portfolio characteristics and investment goals, their investment strategies may differ. Diversification in asset allocation is achieved by shifting the relative market weightings in each asset class during different market conditions. Hence, the value of the balanced funds will fluctuate along with the movement of the stock market, but they tend to be less volatile than a portfolio comprised entirely of equities.
Investors with comparatively lower risk tolerance, and who desire or need regular income, will find this fund suitable.
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